If you are a business that is impacted by COVID-19, then your company may qualify for the ERC (Employee Retention Credit). It’s one of the most important tax credits for small businesses in recent history.
You may have heard of this refundable tax credit or seen solicitations stating that you can get $26,000 per employee. It’s not that simple though.
If you are a business that had a significant reduction of income OR a partial shutdown due to the COVID-19 pandemic in 2020 or 2021, your business may qualify for 26k Per Employee. This refundable tax credit was introduced under the CARES Act to help businesses like yours through this difficult time.
This program can be a lifeline for struggling companies, but it’s not as easy as it sounds. That’s why it’s important to hire expert help when navigating this complex and ever-changing program.
ERC eligibility is based on a variety of criteria, including gross receipts and a business’s level of distress. This means that your business might not qualify in every quarter. The best way to determine eligibility is to utilize the ERC Eligibility and Credit Calculator, which will give you an idea of your chances.
If your business suffered a decrease in income or partial shut down during the COVID-19 pandemic, you could qualify for up to $26,000 per employee in payroll tax credits. This is called the Employee Retention Credit, or ERC.
The Employee Retention Credit is a federal program created under the CARES Act to reward companies that kept their employees throughout the pandemic. Unlike traditional tax credits, the ERC is a refundable credit that pays you cash retroactively for up to three years.
The credit is based on qualified wages, not wages received for personal property protection (PPP) loans, and is paid by employers to the IRS. Qualifying employers may receive up to $5000 per employee in 2020, and up to $7000 per employee in Q1 through Q3 2021. However, the exact amount of money businesses receive depends on a number of factors, including how much their gross receipts decreased or increased during the pandemic and the number of full-time employees they had.