It is important to understand the eligibility requirements for the Employer Retention Credit (ERC) in order to determine if your business qualifies for this tax credit. Here are some key points to consider:
Your business must have been fully or partially suspended due to a government order related to COVID-19, or have experienced a significant decline in gross receipts (50% or more compared to the same quarter in the previous year).
The ERC is available to businesses of all sizes, including tax-exempt organizations.
For wages paid between March 12, 2020 and December 31, 2020, the credit is 50% of qualified wages up to $10,000 per employee. For wages paid between January 1, 2021 and December 31, 2021, the credit is 70% of qualified wages up to $10,000 per employee per quarter.
Qualified wages include wages and health plan expenses paid to employees who are not working due to a suspension or decline in business.
There are additional limitations and requirements for businesses that received Paycheck Protection Program (PPP) loans.
It is recommended that you consult with a qualified tax professional to determine your business's eligibility and calculate the amount of the credit you may be able to claim.