NEWS FLASH – THE EMPLOYEE RETENTION TAX CREDIT – IS IT FOR ME?
- For 2020 qualifying employers can receive up to a $5,000 credit per employee.
- For 2021 qualifying employers can receive up to a $28,000 credit per employee.
Executive Summary – Congress recently extended and enhanced the Employee Retention Credit (ERTC) to help small business negatively impacted by Covid-19. The ERTC is a fully refundable payroll tax credit.
- For 2020 small employers who received the Paycheck Protection Program (PPP) funds are now allowed to also claim the ERTC. Employers qualify if they were fully or partially shut down by governmental order or if they had a greater than 50% drop in gross receipts for a quarter compared to the same quarter in 2019. The maximum wages allowed are $10,000 per employee, for the year, with a 50% credit on those wages up to $5,000 per employee.
- For 2021, the ERTC is expanded to allow small employers to qualify with a greater than 20% drop in gross receipts (2021 Qtr. to 2019 Qtr.), $10,000 of wages per quarter per employee can qualify and the credit on qualifying wages is increased to 70%. At $7,000 per employee, per quarter an employer potentially could receive $28,000 per employee for 2021.
The Employee Retention Tax Credit can be a game changer for your business, unfortunately it definitely has its complications. Ketel Thorstenson, LLP is ready to help you determine if you qualify, assist with wage calculations including segregating wages for ERTC from wages used in the PPP loan forgiveness and finally we can prepare the Forms necessary to receive the credit.
In short, if you qualify, the Employee Retention Tax Credit is potentially huge and Ketel Thorstenson, LLP can help you to take advantage.