The CARES Act’s Employee Retention Credit is a fully refundable tax credit. For the 2020 program, the ERC is equal to 50% of qualified wages (including allocable qualified health plan expenses) that eligible employers pay their employees. This applies to wages paid after 3/12/2020 and before 1/1/2021.  The maximum amount of wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an employee is $5,000.

For the 2021 program, the credit is increased to 70%, and the limit is $10,000 per quarter. This means the annual maximum for an employee is $26,000.

The tax credit offsets all withheld federal employment taxes including federal income tax withholding, Employer FICA and Medicare. Any excess credit will be refunded or advanced by the IRS.

Eligible Employers for the purposes of the Employee Retention Credit are those that carry on a trade or business during calendar years 2020/2021, including a tax-exempt organization, that either:

• Fully or partially suspends operations by a governmental order, or
• Experiences a significant decline in gross receipts during a calendar quarter when compared to 2019

The only types of businesses that are not eligible to claim the CARES Act and employee retention credit are federal, state, and local government entities. Self-employed individuals are also ineligible for support, but there are nuance requirements that may allow you to claim.

Tribal governments may be eligible. As you navigate through the application process, you’ll learn quickly what you’re eligible for, and how we can assist you.

If you’re still unsure of whether or not you and your business qualify, start gathering your documents. Applying to determine if you qualify is the only way to know for sure. Even if you’re not eligible under the ERC and CARES Act, you might be eligible for another program.

Qualified wages are compensation provided to employees during an eligible period.  An eligible period is either:

a) the time during which the trade or business is fully or partially suspended by a governmental order, or 

b) for 2020, any calendar quarter during which gross receipts are 50% less than the amount received during the same quarter of 2019; for 2021, any calendar quarter during which gross receipts are 20% less than the same quarter of 2019

Yes. Under the Consolidated Appropriations Act, businesses can now qualify for ERC even if they already received a PPP loan. Note, though, that the ERC will only apply to wages not used for the PPP.

Your business qualifies for the ERC, if it falls under one of the following:

• A government authority required a partial or full shutdown of your business during 2020 or 2021. This includes your operations being limited by commerce, inability to travel or restrictions of group meetings.
• Gross receipt reduction criteria is different for 2020 and 2021, but is measure against the current quarter as compared to 2019 pre-COVID amounts.

Yes. To qualify, your business must meet either one of the following criteria:

• Experienced a decline in gross receipts by 20%, or
• Had to change business operations due to government orders

Many times are considered as changes in business operations, including shifts in job roles and the purchase of extra protective equipment.