What are the credits? 

The credit reduces your employer Social Security tax liability. If your credit winds up being more than your Social Security tax liability, you will get a refund from the IRS. In other words, although it is called a tax credit, it is most frequently received as a cash payment from the IRS.

The max amount an employer can claim is up to $5,000 refundable credit per employee for tax year 2020 and up to $7,000 refundable credit per employee, per quarter for 1st, 2nd, and 3rd quarters only. If you are claiming under Recovery Startup, up to $50,000 for 3rd and 4th quarter of 2021. 

What is the deadline to claim the ERC?

Although the program is set to expire December 31, 2021, the credit can be claimed on amended payroll tax returns [941-X] as long as the statute of limitations remains open, which is three years from the date of initial filing of Form 941. 

What are qualified wages?

Qualified wages are compensation provided to employees during an eligible period.

How do I qualify?

Businesses can qualify through Gross Revenue Testing, Shutdown Provision, or the Recovery Start Up Business. Refer to “What is the ERC?” under Our Services for more information. 

What happens if I own multiple businesses?

Separate businesses under common ownership must be evaluated together for eligibility.  If the tests are passed, all entities are eligible; if not, none are eligible. The ERC is then calculated and filed for each separately.

What if my company started after 2/15/2020? 

You can use the Recovery Startup Provision. Refer to “What is the ERC?” under Our Services page for more information.

What are the limitations?

If you, or family combined, own more than 50% of the company. Your wages and any family members included on the payroll will not count towards the credit, but all other employees that are not in relation will count. 
If you received a PPP loan, any wages that were used towards forgiveness must be excluded from the ERC qualified wages as to not double count. 

There is no size limit on eligibility for the ERTC. However, small and large businesses are treated differently. 

• For employers with 100 or fewer full-time employees (FTEs) for tax year 2020 and less than 500 FTEs for tax year 2021, all employee wages qualify for the credit.

• For employers with more than 100 FTEs for 2020 and more than 500 FTEs for 2021, qualified wages are wages paid to employees when they are not providing services (ex. furloughed) due to COVID-19-related circumstances.

I received PPP funds. Does that mean I cannot claim the ERC?

NO. You can receive PPP and claim the ERC at the same time. Under the CARES Act rules, wages used for forgiveness must be excluded from the qualified wages of the ERC, but otherwise, businesses can claim both. 

If you received a second round of your PPP loans, we also offer services to do your PPP forgiveness and maximize your ERC credit at the same time. Contact us for more details!

I was shut down, but how do I know if my experiences make me eligible?

Under the shutdown provision we can provide you with a questionnaire and to help us determine the impact that the pandemic had on your business.