Understanding the Employee Retention Tax Credit: A Guide for Small Business Owners

The ERC (Employee Retention Credit) is a refundable tax credit provided by the United States government under the CARES Act. The ERC is intended to provide financial support to businesses that have been affected by the COVID-19 pandemic, allowing them to retain their employees and keep their businesses running during these hard times.

What companies are eligible for the ERC tax credit?

Businesses of all sizes, including tax-exempt organizations, that have experienced a significant decline in revenue due to COVID-19 may claim the ERC. Eligible businesses include those that were fully or partially suspended due to government mandates, as well as those that experienced a decline in gross receipts of more than 20% compared to the same quarter in the prior year.

To learn more about what businesses are eligable for the ERC, you can read more here

How much is the ERC tax credit?

The ERTC is worth up to $5,000 per employee for 2020 and up to $7,000 per employee per quarter for 2021. Eligible businesses can claim the credit against their payroll tax liabilities, and any excess can be refunded to the business.

What expenses are eligible for the ERC tax credit?

Eligible expenses include wages and health care costs paid to employees between March 12, 2020, and December 31, 2021. The credit applies to up to 70% of qualified wages up to $10,000 per employee per quarter.

What is the procedure for businesses claim the ERC tax credit?

Businesses may claim the ERC on their quarterly employment tax returns (Form 941) or on an amended return (Form 941-X) for previous quarters. Businesses can also request an advance payment of the credit by filing Form 7200.

Is it possible for businesses claim both the ERC tax credit and the PPP loan?

Yes, businesses can claim both the ERC tax credit and the PPP (Paycheck Protection Program) loan. However, businesses cannot use the same wages to calculate both the ERC and the PPP loan forgiveness.

In conclusion, the ERC tax credit is a useful tool for businesses impacted by the COVID-19 pandemic, allowing them to retain their employees and keep their businesses running during these difficult times. Eligible businesses should consult with their tax advisors to determine if they are eligible and to ensure they claim the credit correctly.

 

If you're a business owner who has been impacted by the COVID-19 pandemic, you may be eligible for the Employee Retention Credit (ERC) tax credit. This valuable credit can provide financial support to help you retain your employees and keep your business running during these difficult times. Don't miss out on this opportunity to get the financial support your business needs. Visit https://myertcassist.com now to find out if your business qualifies for the ERC tax credit.