What is the Employee Retention Credit?
The Employee Retention Credit (ERC) offers a refundable tax credit on the payroll taxes paid on qualifying wages during the COVID-19 pandemic.
The COVID-19 pandemic caused vast and widespread hardships to employees, employers, businesses and operations that we are still facing today. The ERC is a tax credit introduced under the CARES Act to help businesses recover from the effects. This incentive was designed to encourage and reward businesses to keep employees on payroll by providing a tax credit for qualified wages and expenses paid for by your business.
Does your business qualify for this tax credit? For the calendar year 2020, employers with less than 100 employees who paid qualified wages after March 12, 2020 and before January 1, 2021 can potentially claim the credit in 2020. For the calendar year 2021, eligible employers with less than 500 employees can potentially claim the credit for qualified wages paid to employees after Dec. 31, 2020, and before Oct. 1, 2021.
To learn more about the specific program details, request a complimentary consultation with one of our specialty tax credit associates.
Already filed for PPP?
The IRS has now allowed businesses who before had to pick between the Paycheck Protection Program (PPP) and ERC to most likely use both stimulus programs. Connect with our team to make sure that you’re not leaving money on the table!
How to Apply for the Employee Retention Tax Credit
Step 1
Apply
Fill out the form to begin your application to determine eligibility.
Step 2
Upload
Use our secure system to safely upload all necessary documents and information to our tax credit team.
Step 3
Eligibility
Our specialty tax associates will review your specific data to estimate the refundable credit you may be eligible for and project the claim timeline. If there are no credits to be claimed, there is no cost to you.
Step 4
Submit
We will assess, prepare, and submit your information for filing with the IRS using our secure and compliance-focused technology.
Step 5
Tax Credits
Upon filing the 941x with the IRS, you will receive a refund on the qualifying payroll tax paid in 2020 and 2021 when the IRS processes your claim.
Step 6
Future Proofing
Optimize your future by working with StenTam to help your business claim future credits with increased efficiencies.
Common Questions About ERC
What is the Employee Retention Credit (ERC)?
What businesses may be eligible for the Employee Retention Credit?
Your business may be eligible for the ERC if its operations were fully or partially suspended by governmental COVID-19 orders limiting commerce, travel or group meetings or experienced a significant decline in gross receipts during 2020 or the first three quarters of 2021. If your business started to operate on or after February 15, 2020, it may qualify to claim the ERC for the third or fourth quarters of 2021 as a recovery startup business.
What wages qualify for the Employee Retention Credit?
Qualified wages under the ERC program are limited to the first $10,000 of compensation paid to any employee during a calendar year (2020) or calendar quarter (2021) and can be claimed for wages paid or incurred from March 13, 2020 through June 30, 2021.
Here’s a year-by-year breakdown of what the Employee Retention Credit offers to eligible employers:
- 2020 ERC:A credit against certain payroll taxes of 50% of the wages paid — up to $10k per employee — from March 12 – December 31, 2020 (capped at $5k per employee).
- 2021 ERC: A quarterly tax credit of 70% of the first $10,000 in wages per employee in each quarter of 2021 from January to September 2021 (capped at $7K per employee per quarter).
What constitutes a significant decline in gross receipts under the Employee Retention Credit program?
An employer had a significant decline in gross receipts in 2021 during the first calendar quarter for which gross receipts for that quarter were less than 80% of those for the same calendar quarter in 2019.
How do I calculate my Employee Retention Credit?
The ERC equals 50% of the qualified wages for 2020 and 70% for 2021. Note that the maximum credit amount is for 2020 is $5,000 per employee for the calendar year and for 2021 is $7,000 per employee per quarter.
Who is considered a full-time employee (FTE) under the Employee Retention Credit program?
Is my nonprofit/tax-exempt organization eligible for the Employee Retention Credit?
Can a recovery startup business claim the ERC?
Do Employee Retention Credits have to be paid back?
Employers who received the ERC for 2020 or 2021 or both, however, must amend their corporate income tax returns (and personal returns if a corporation is a pass through entity) for the relevant years.
What is the deadline to claim my Employee Retention Credit?
How do I claim the ERC?
- Payroll data
- Personal information (including Employer Identification Number)
- Prior years’ tax returns
- Copies of Form 941 filed for each quarter you plan to claim the ERC
How is the Employee Retention Credit paid?
How do I check the status of my Employee Retention Credit?
How long does it take to receive an Employee Retention Credit refund?
What if I've already filed for a PPP Loan?
What is the difference between the Employee Retention Credit and a Paycheck Protection Program (PPP) loan?
The ERC is a tax credit established to encourage eligible employers to keep their employees on the payroll during the COVID-19 outbreak. It’s a refundable and non-refundable credit that businesses can claim on qualified wages, including some health insurance costs, paid to employees.
Who authorized the Employee Retention Credit?
What does the American Rescue Plan Act have to do with the ERC program?
How can Stenson Tamaddon help me maximize my ERC?
By filing with us, though, you can rest easy knowing that your information will be handled with care and strict compliance. We pride ourselves in helping small businesses reach their full potential. Let us help you navigate the qualification process transparently and efficiently.
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