What Employers Must Know About the Employee Retention Tax Credit (ERTC) Program
Since the outbreak of COVID-19, employers have faced countless challenges. Shutdown orders, financial pressures, employee availability, the list goes on. In the beginning, panic built in an economy facing unprecedented challenges. Employers everywhere were in need of quick solutions. Thankfully, they were quick to come in the form of optimized tax credit programs that helped to improve cash flow.
In an upcoming webinar, we discuss the Employee Retention Tax Credit (ERTC) Program. The ERTC Program helped more than 300 restaurants, retailers, healthcare facilities, physician groups, manufacturing and more fund over $35M. Below we provide a snapshot of the information to be covered in-depth during the webinar.
ERTC Introduction
The ERTC program is included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $2.2 trillion economic stimulus bill included Paycheck Protection Program (PPP) loans, Local government assistance and the Employee Retention Tax Credit (ERTC). The ETRC is one program, however, it includes provision for two separate years 2020 and 2021.
2021 Qualifications
In order to qualify for ETRC in 2021, employers must have had their business fully or partially suspended by government order due to COVID-19 and have gross receipts below 20% of the same quarter in 2019. Though, exceptions do apply and oftentimes, additional information is needed.
The number of employees also impacts qualification. For employers with less than 500 employees, credit is based on wages paid, whether or not employees are performing work. Alternatively, for employers with more than 500 employees, credit is based only on wages paid to employees who did not work.
Eligible employers can receive a credit for up to 70% of qualifying wages paid in Q1 and/or Q2, for a maximum credit of $7,000 per eligible employee. Qualifying wages include wages paid and certain health care plan costs.
2020 Qualifications
In order to qualify for ETRC in 2020, employers must have had their business fully or partially suspended by government order due to COVID-19 and have gross receipts below 50% of the same quarter in 2019. Though, exceptions do apply and oftentimes, additional information is needed.
The number of employees also impacts qualification. For employers with less than 100 employees, credit is based on wages paid, whether or not employees are performing work. Alternatively, for employers with more than 100 employees, credit is based only on wages paid to employees who did not work.
Eligible employers can receive a credit for up to 50% of qualifying wages paid after March 21, 2020, for a maximum credit of $5,000 per eligible employee. Qualifying wages include wages paid and certain health care plan costs.
Calculate and then Claim Credits
The document requirements for eligibility also vary slightly. The document requirements for 2021 include a 2019 1094C, 2020 QTRLY P/L Statements (All Four), 2019 QTRLY P/L Statements (All Four), 2020 Payroll Register (Mar-Dec), PPP Loan Forgiveness Application, and a R&D Tax Credit Study.
For 2020, document requirements include a 2019 1094C, 2021 QTRLY P/L Statements (Q1/Q2), 2021 Payroll Register (Q1/Q2), PPP Loan Forgiveness Application, and a R&D Tax Credit Study.
ERTC Deliverables and Terms
Upon eligibility and acceptance, employers who are admitted into the ERTC program include Formal Calculation Binder with Employer Documentation, Employee Documentation, a Credit Calculation, and 941/x Assistance. ERTC credits are 100% contingent free with no retainer and only one invoice per calculation.
Join the Webinar to Learn More
The information above is a brief overview of the details of the ERTC Program. If you would like to learn more about the program or whether or not you are eligible, join the webinar hosted by Advantage Benefit Solutions on May 20th. REGISTER NOW.
