It's the new year and what better way to start the year with money in your pocket? CEO and Co-founder of myHRcounsel Mark Young presents a webinar on the Employee Retention Tax Credit (ERTC).
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The ERTC, what is it and where did it come from?
The ERTC provides tax credits to employers; these credits are refundable for employee wages paid.
The ERTC was born out of the COVID legislation, CARES act, and later modified by other legislation, Relief Act, Rescue Plan Act, and the Infrastructure Act.
Benefits of the ERTC
- Up to $26,000 per employee!
- Refundable credit:
- up to $5,000 per employee (for qualified wages paid from 3/15/20 to 12/31/20)
- Up to $7,000 per employee (for qualified wages paid from 1/1/21 to 9/30/21)
- $7,000 per quarter! This means that there is up to $21,000 available per employee for wages paid in the applicable time period in 2021
There are two ways to determine if you are eligible for the ERTC. If the employer can show either:
- its business operations were fully or partially suspended due to a COVID-19 governmental order
- its gross receipts in 2020 and/or 2021 decreased a sufficient amount relative to prior employment calendar quarters (different test based upon year applying for)
- Companies with less than 500 FTE's
- Available to employers that paid qualified wages to employees
- Can still get ERTC if you received a PPP loan
- Just can’t get credit for wages paid with PPP loan proceeds
- Nonprofits are eligible
Significant Decrease in Gross Receipts
- Whether the employer had a significant decline in gross receipts in any quarter in 2020 relative to the corresponding quarter in 2019
- A decline in gross receipts is significant if the decline in gross receipts in any quarter in 2020 is less than 50 percent of the gross receipts of a corresponding quarter in 2019
- After this threshold requirement is met, the employer continues to qualify until gross receipts are greater than 80 percent of its gross receipts for the same calendar quarter in 2019
- If an employer has gross receipts in any calendar quarter in 2021 that are less than 80 percent of its gross receipts for the same quarter in 2019
- Special rules apply to the extent the employer was not in existence in any calendar quarter of 2019
Full or partial suspension of business operations
- Alternate method to qualify if don’t meet the gross receipts test
- Must show that business operations were fully or partially suspended due to a COVID-19 governmental order
- Direct correlation requirement
Government orders include:
(1) orders from a city’s mayor stating that all non-essential businesses must close for a specified period;
(2) a State’s emergency proclamation that residents must shelter in place for a specified period, other than residents who are employed by an essential business and who may travel to and work at the workplace location;
(3) an order from a local official imposing a curfew on residents that impacts the operating hours of a trade or business for a specified period; and
(4) an order from a local health department mandating a workplace closure for cleaning and disinfecting
How to claim your credit
myHRcounsel is available for any questions; even if you aren't sure, you can contact the team at email@example.com to determine eligibility.
- Provide a payroll report for the 2nd, 3rd and 4th quarters of 2020, and the 1st, 2nd and 3rd quarters of 2021 – that shows the pay for the quarter for each individual employee
- MyHRcounsel files all forms (if you qualify), you sign 1st page (which will be sent to you) and we mail
- Currently, it is taking about 4-6 months to receive the credit/refund
- Upon receiving, you must notify myHRcounsel (even though it is public record) and we bill only 15% of the gross amount
- ACT FAST
- Sign up at https://www.myhrcounsel.com/greenshades/ertc.
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