EMPLOYEE RETENTION CREDIT (ERC) Help
Created by the CARES Act, the Employee Retention Credit (ERC) is a refundable payroll tax credit of up to $26,000 per employee for eligible businesses and non-profits. The ERC was designed to encourage businesses impacted by the global pandemic to retain employees.
The credit is 50% of up to $10,000 of qualified wages per employee in 2020 and 70% of up to $10,000 of qualified wages per employee per quarter in 2021. It is available to eligible employers of any size.
Employers may include employer-paid healthcare costs and premiums in qualified wages, but not wages paid with PPP loan funds or used in calculating certain other credits.
As a payroll tax credit, eligible employers may be able to take advantage of the ERC right away by reducing their payroll tax deposits.
OUR EXPERTS WORKING FOR YOU
Your business may be eligible for the ERC if it lost revenue OR its operations were impaired by a COVID-19 related government order. In the third and fourth quarter of 2021, your business may automatically qualify if it was not carrying on a trade or business prior to February 16, 2020.
Eligibility for the credit is determined quarterly by passing at least one of the following tests.
- Gross Receipts Test: The organization’s gross receipts for the calendar quarter dropped significantly (by more than 50% in 2020 and 20% in 2021) compared to the same quarter in 2019.
- Suspension Test: The organization’s ability to meet demand, receive products or services timely, or operate at capacity was impaired due to a COVID-19-related government order, such as social distancing or capacity constraints.
- Recovery Start-up Business: For the third and fourth quarter of 2021 only, the employer began carrying on a trade or business after Feb. 15, 2020.
While this may seem straightforward, the law continues to evolve, with frequent changes and hundreds of pages of IRS guidance. AW Vanguard has skilled, experienced ERC professionals who will help you navigate the intricate details of the law to determine your eligibility, optimize your credit (along with the PPP loan and other credits), and properly file and build audit-ready support for the ERC.
IS IT REALLY WORTH IT?
Perhaps you are wondering if your business is eligible for the credit or whether a free consultation is worth your time. Without looking into the credit you could be walking away from potentially thousands of dollars in cash for your business! Put your CFO hat on and consider this:
- The ERC is available to employers of any size as long as they are eligible. An eligible business with as few as five employees could receive up to $165,000 in ERCs over the two-year period!
- Unlike other stimulus programs, you do not need to have lost revenue to be eligible for the credit. Businesses that have been thriving during the pandemic may also qualify.
- Unlike other stimulus programs, there are no constraints on how you can use the money from the credit. You can use it to pay down debt, expand your business, remodel, or save it for a future use and still be eligible for the credit.
- Because the credit is refundable, if your credit exceeds your tax liability, you can receive a refund of the excess. For example, if your payroll tax liability is $50,000 and your credit is $150,000, you may receive the difference – $100,000 – as a refund rather than having to wait to apply against future payroll taxes.
- As a payroll tax credit, you can enjoy the benefit of the credit almost immediately by reducing your federal payroll tax deposits – meaning the federal taxes withheld from your employees’ paychecks become yours!
WE WORK WITH YOUR TEAM
Our experts will work with your accounting and payroll professionals to maximize your benefits. Enjoy the peace of mind knowing that everything is being handled “in-house” by your dedicated team of experts.
We beat our competition on price, skill and speed. Call us today and let’s talk. No sales pitch. No pressure. Just an informed conversation. We’re confident you’ll quickly realize our knowledge base and approach to the ERC will deliver the expertise you need and deserve.
* This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax advice. You should consult your advisors regarding any financial decisions or future plans.