The Employee Retention Tax Credit (ERC) is a refundable tax credit designed to reward business owners for retaining employees throughout the COVID-19 pandemic. The ERC is available to both small- and mid-sized businesses. It was signed into law on March 27, 2020, as part of the CARES Act. The bill was significantly expanded in 2021 to allow businesses that received PPP loans to qualify. Now business owners can receive both if the wages that were paid with the PPP loan are not used when calculating the Employee Retention Credit so there is no double dipping.
Business owners impacted by COVID-19 can claim up to $5,000 in refundable tax credits for each employee on the payroll in 2020 and up to a $7,000 credit per quarter (excluding the fourth quarter) for each employee in 2021.
There is still time to claim the credit. As a business owner, if your business recovered from a “substantial decline in gross receipts” and you didn’t previously file for the credit, you may still file for a retroactive ERC refund. Despite the expiration date of October 1, 2021, you can still take advantage of the employee retention tax credits if your business is eligible. Businesses have three years after the program ends to look back at wages paid after March 12, 2020, in order to determine eligibility.
Many businesses have been quick to assume they are ineligible for the ERC. If you think your business may qualify for the ERC, please contact Mike Sneden (firstname.lastname@example.org or Gary Unkel (email@example.com for a free consultation.