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The Employee Retention Credit is claimed by amending a business's quarterly IRS payroll tax returns and is based on the wages the business paid to its employees during 2020 and 2021. A business may be eligible for the credit if a government order limited its operations by forcing the business to close, required capacity restrictions, or otherwise restricted its business functions. A business may also be eligible for the ERC if it had a significant decline in revenue in any quarter, since the beginning of the pandemic through the third quarter of 2021.
See if your business might be eligible to receive ERC.
✅ Full shutdowns
✅ Partial shutdowns
✅ Interrupted operations
✅ Supply chain interruptions
✅ Inability to access equipment
✅ Limited capacity to operate
✅ Inability to work with your vendors
✅ Reduction in services or goods offered to your customers
✅ Cut down in your hours of operation
✅ Shifting hours to increase sanitation of your facility
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The ERC is a refundable tax credit for employers--introduced early in the COVID-19 pandemic to help employers keep their employees on payroll.
The Employee Retention Credit is claimed on a business's quarterly IRS payroll tax returns, based on wages paid to its employee during periods of the pandemic that the business experienced a suspension in operations or a significant decline in revenue.
Yes! The Employee Retention Credit can be claimed on an amended quarterly payroll tax return up to three years from the due date of the original return.
Because of their ongoing pandemic-related backlog, the IRS is currently taking between 8-9 months to process Employment Retention Credit claims.
How do I apply for ERC credit? There are three steps.
1) Determine the business's eligibility.
2) Calculate the Qualified Wages paid by the business.
3) Claim the ERC on the business's amended quarterly payroll tax returns.
Yes. Small eligible employers can include wages paid to all employees (even including part-time employees). Large eligible employers can only include those wages paid to employees for not providing services.
Per the CARES Act, whether a business is a large or small employer depends on whether “the average number of full-time employees employed during 2019 exceeded the applicable threshold amount.”
It is an employee who, with respect to any 2019 calendar month, worked either and average of at least 30 hours per week or 130 hours per month.
No. The IRS clarified that matter when it issued Notice 2021-49, stating:
“For purposes of determining whether an eligible employer is a large eligible employer or a small eligible employer, eligible employers are not required to include full-time equivalents when determining the average number of full-time employees.”
• The applicable threshold amount for the 2020 ERC is 100 or fewer full-time employees (as counted in 2019).
• The applicable threshold amount for the 2021 ERC is 500 or fewer full-time employees (as counted in 2019).
• For the 2020 ERC, a “small employer” is an employer that had an average of 100 or fewer full-time employees (as counted in 2019). Exceeding that amount results in large employer classification.
• For the 2021 ERC, a “small employer” is an employer that had an average of 500 or fewer full-time employees (as counted in 2019). Exceeding that amount results in large employer classification.
No. Read QAs #2-#5 and count only as instructed therein.
