Is your business missing out by not taking advantage of employee retention tax credits? It’s not too late to claim the Employee Retention Credit (ERC), so you can maximize savings for your business. Keep reading to get the details on two ways your business can qualify for employee retention tax credits and what you can do today to move forward in the qualification process.
Understanding the Employee Retention Credit
The Employee Retention Credit (ERC) comes from the CARES ACT of 2020. Along with the Paycheck Protection Program (PPP), the ERC is part of the act that exists to help businesses recover the costs of retaining and paying employees during and after hardships resulting from the COVID-19 pandemic.
Although the ERC is less well known than the Paycheck Protection Program, businesses qualified for the PPP can also claim the ERC for 2020 and 2021. So what’s the difference between the two? The PPP is a loan program to pay employees, while the ERC is a tax credit businesses claim for their wages during the COVID-19 pandemic.
Here’s the ERC credit amount you may claim as a qualified employer:
- Year 2020: Recover 50% of qualified costs—as much as $5,000 per employee.
- Year 2021: Recover 70% of qualified cost—as much as $7,000 per employee each quarter.
- Qualified employers can claim up to $26,000 per employee for 2020-2021.
2 Ways Your Business Qualifies for the ERC
There are two ways your business can qualify to receive the ERC:
Qualifier #1: Full or Partial Operations Suspension by Government Order
If an order from the government fully or partially shuts down your business due to the COVID-19 pandemic, you qualify for the ERC. Even if you did not have to close your business due to a government order but could not get critical goods and materials from suppliers requiring you to suspend your business operations, you qualify.
Qualifier #2: Experienced a Significant Decline in Your Business’s Gross Receipts
If your gross receipts for a calendar quarter in 2020 were less than 50% of the same quarter in 2019, you qualify for the ERC. For 2021, the gross receipts for a calendar quarter would need to be below 80% of the comparable quarter in 2019 to qualify. Remember that once your gross receipts rise above 80% of the receipts in the comparable quarter in 2019, you will no longer qualify after the end of the quarter.
Let Verity Tax Credits Help You Claim Your ERC
At Verity Tax Credits, LLC, our experienced team can walk you step by step through the process of claiming the Employee Retention Credits your business deserves. Don’t leave money on the table—Verity Tax Credits, LLC, can help you maximize savings for your business. Schedule a 20-minute call to discuss whether you qualify for employee retention tax credits.