The pandemic severely disrupted industries worldwide, including construction. Construction businesses were forced to suspend their operations during government lockdowns and social distancing orders. They faced supply chain issues and worker illness that delayed their building timelines and lost them clients.
If your construction business faced hardships during the pandemic, you may qualify for the Employee Retention Tax Credit (ERTC). Here’s what you need to know about the ERTC for construction companies:
Qualifying for the ERTC as a Construction Business
The ERTC helps ease the Social Security tax burden for businesses that experienced significant declines in gross revenue during 2020 and/or 2021 and maintained the same number of employees despite pandemic-related hardships. Your business may qualify for this tax credit if:
- In 2020, your business experienced a 50% decline in gross receipts (accounting for almost all revenue/income your business gained) compared to the gross receipts from the same quarter in 2019, OR
- In 2021, your business experienced a 20% decline in gross receipts compared to the same quarter in 2019
Your business can claim up to $10,000 per employee for the 2020 tax year and up to $21,000 per employee for the 2021 tax year. The amount you can claim depends on your number of employees.
Construction companies with crew sizes of 100 or fewer could claim qualified wages for all employees in 2020, while this number expanded to 500 in 2021. If your business exceeded these crew sizes, you can claim the wages you paid to workers during periods they weren’t performing services because of lockdowns.
FAQs About the ERTC for Construction Companies
Can businesses that received a PPP loan still qualify for the ERTC?
The ERTC was originally only available to companies that did not receive a PPP loan, but the Consolidated Appropriations Act of 2021 changed this policy. Now, you can claim both the PPP and the ERTC for eligible periods.
What if a construction business didn’t meet the gross receipts threshold for eligibility?
If your construction business did not see a significant decline in gross receipts (50% in 2020 or 20% in 2021) but experienced other disruptions from the pandemic, you may still be eligible for the ERTC. The Consolidated Appropriations Act of 2021 expanded this credit to include businesses suspended in part or whole by a government order, even if their revenue was not significantly impacted.
Can construction companies that grew during the pandemic still qualify?
If your construction company experienced a growth in revenue during 2020 or 2021, you might assume you don’t qualify for the ERTC. But you may still qualify if you had to change your business operations in response to a government order. You may even be eligible if your business continued during the pandemic but couldn’t get the materials you needed from suppliers.
Is it too late to apply for the ERTC in 2023?
No, you can still retroactively claim the ERTC for the 2020 tax year until April 15, 2024, and for the 2021 tax year until April 15, 2025. You will need to fill out Form 941-X amendments for each quarter and submit them to the IRS.
Need Assistance Claiming the ERTC for Construction Companies?
The tax attorneys at Dayes Law Firm would be happy to help you understand your eligibility for the ERTC, calculate your qualified wages, and even file Form 941-X on your behalf. Contact us today at 866-567-4510 or fill out our online form for more information.