The Employee Retention Credit (ERC) is a refundable payroll tax credit provided by the government to businesses negatively affected by COVID-19. 

Businesses that experienced a loss in revenue and/or modification to business operations may be eligible for up to $26,000 per W-2 employee.

ERC Flyer
IRS FREQUENTLY ASKED QUESTIONS ON ERC

Until late 2020, employers who had taken a PPP loan could not use the ERC. The major change resulting from the most recent legislation allows these employers who took PPP loans to take the employee retention credit, so long as the same wages are not used for both. This knowledge gap is preventing many businesses from pursuing the ERC.

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Curious If You Qualify or Have General ERC Questions?


Recovery Startup Business Qualification

(Only applies to Q3 and Q4 of 2021)

Qualification Criteria:

 

1. Business operations began AFTER 2/15/20

2. Annual sales of less than $1 million dollars


 

 


2020 Example:

A restaurant with 10 employees is forced to close its dining room or limit in-house dining and shifts focus to delivery and to-go orders. The employees continue to work during this time. This is considered a partial shutdown. The timeframe is from March 13th, 2020 - December 31st, 2020.

10 employees is a potential $50,000 credit.

20 employees would be a max credit of $100,000.


2021 Example:

(Same scenario as 2020 Example)

10 employees, quarterly max credit potential of $70,000.

If max credit is applied to all 3 quarters, total of $210,000 in refundable 2021 credits.

20 employees would be a max credit of $420,000.