Help me apply for the ERC


ERC Employee Retention Credit Extension

  • Now in addition to PPP
  • Can’t use the same wages though
  • Extended through 6/30/21
  • Refundable payroll tax credit reported on 941
  • Different rules for 2020 and 2021
  • Eligibility by quarter using the Shutdown test or Reduction in Revenue

2020

      • 50% of wages up to $5K per employee per year
      • Only the first $10K of payments to each employee matters
      • If over 100 employees, you can only use wages paid to employees who are not working

2021

      • 70% of wages up to $7K per employee per quarter
      • Only the first $10K of payments to each employee matters
      • If over 500 employees, you can only use wages paid to employees who are not working

Shutdown test

Operations are fully or partially suspended during a calendar quarter due to “orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes)” due to COVID-19.  For details about scenarios that qualify, please see the IRS page.

Gross Receipts Test

2020:  Starts with a 50% decline in receipts from the same quarter in 2019 to 2020.  Continues as long as you remain in a 20% decline, plus one more quarter

2021:  Must have a 20% decline compared to 2019 or if you didn’t pass this test, you can still pass if the preceding quarter had a 20% reduction.

 

Example of how powerful the ERC can be: