Employee Retention Credit

REFUNDABLE CREDIT (THIS MEANS THAT YOU CAN GET A REFUND CHECK FROM THE GOVERNMENT EVEN IF YOU DID NOT PAY TAXES LAST YEAR.)

How To Qualify

Full Year, 2020:

  • The company must show more than a 50% decline in quarterly receipts in any part of the business as compared to the same quarter in 2019.
  • The maximum credit is $5,000 per employee per year.
  • This applies only to full-time employees (30 or more hours per week).

How You Can Qualify in the First Half of 2021:

  • The company must experience a reduction of at least 20% in the first half of 2021 as compared to the first half of 2019.
  • The employer’s share of social security tax is equal to 70% of employee wages paid and health care expenses.
  • The maximum credit is $7,000 per employee per quarter.

How You Can Qualify in the Second Half of 2021:

  • Same eligibility rules as the first half
  • Refundable credit of $7,000 per employee per quarter ($28,000 per year)

Caveats

  • Employer cannot claim the ERC on wages it uses to receive PPP loan forgiveness
  • Small businesses can request advanced payments on the credit from the IRS
  • Small business: defined as 100 employees or less in 2020
  • Small business: defined as 500 employees or less in 2021
    • Can claim wages for employees that are actively working or not actively working
  • Large business: defined as greater than 500 employees
    • Can only declare wages for employees not providing services
  • Applies only to full-time employees (30 or more hours per week)

Have Alternate Tax Solutions help your businesses leverage Employee Retention Credit