Employee Retention Tax Credit
Recent changes to the Employee Retention Tax Credit (ERTC) included as part of the American Rescue Plan Act (ARPA) of 2021, signed into law on March 11, 2021, expand the eligibility and the time businesses are able to claim the credit. The opportunity is now to claim this credit if you meet eligibility rules for 2021, and even retroactively for 2020.
What is the Employee Retention Tax Credit?
The ERTC was originally part of the 2020 CARES Act and included tax credits for businesses to retain employees during the pandemic. The ERTC is a tax credit that can be claimed against eligible employer’s total qualified wages for each calendar quarter on their federal employment tax returns (941).
Credits are derived from Federal taxes including Social Security and Medicare, and Federal Income Tax. The credit can be taken for all quarters 2020 and 2021. Past quarters can be processed retroactively but the eligibility requirements for 2020 are higher than for 2021.
Changes included in the ARPA now allow businesses that received PPP loans to take ERTC, but double-dipping is not allowed. This means that companies that used PPP funds from some time in the 2nd quarter in 2020 through the 3rd quarter, and if a 2nd draw was taken in 2021, cannot claim the ERTC for the period PPP funds were used to cover wages.
Who is eligible?
To be eligible, an employer must meet one of the following conditions:
Operations have been or are fully or partially suspended during the calendar quarter due to a COVID-19 related government authority order, or;
2020 eligibility – Gross receipts for a calendar quarter are <50% compared to the same quarter in 2019.
2021 eligibility – Gross receipts for a calendar quarter are <20% compared to the same quarter in 2020.
It is advised that you consult with your CPA or tax attorney to determine your eligibility.
How Much Can You Receive?
2020 Retroactive Credits – The 2020 CARES Act established an employee retention credit of 50% of $10,000 per employee per quarter in qualified wages, or $5,000 tax credit per employee.
2021 Credits – The 2021 credits total 70% of wages up to $10,000 per employee per quarter, or up to $7,000 per employee per quarter in 2021 totaling $28,000.
Wages paid for Covid Sick pay and wages paid to certain family members may not be eligible.
How Can Infinium HR Help?
If your company is eligible for ERTC, Infinium can assist with calculating the credits both for applicable quarters in 2020 and in 2021.
We will take care of the following:
- Review qualified wages
- Calculate credit amount
- Complete and file applicable 941 returns or amended returns
The potential relief can be in the thousands of dollars at the end of a quarter, or in the form of a refund from the IRS for excess credits.
To get started, please complete the form below to signify which quarters you are eligible for. We will charge a nominal fee of $100 initial setup and $50 for each quarterly return or amended quarterly return.
If you have any questions, please contact Infinium or consult with a qualified CPA or tax attorney.