There’s still time to claim the COVID-19 employee retention tax credit! Find out if your business is eligible to receive this tax credit of up to $26,000 per eligible employee
Claiming the Employee Retention Tax Credit (ERTC) can save you thousands of dollars. PayBridge can help simplify the complex paperwork required to determine your credit amount and file amended 941s. Let us take care of the hassle while YOU claim the rewards.
What is the Employee Retention Tax Credit (ERTC)?
The Employee Retention Tax Credit (ERTC) is a payroll tax credit that can potentially eliminate your businesses payroll tax or generate a cash refund. For most businesses this is one of the largest federal incentives available. Eligible businesses can file retroactive claims for wages paid in prior tax quarters. Businesses can now claim this credit even if they took part in the Paycheck Protection Program (PPP) or other COVID relief programs.
The ERTC is complex, and most clients do not fully understand eligibility and the nuances to maximize the credits. We work alongside our partners, tax credit industry veterans who have been in business over 40 years who specialize in identifying and processing federal and state credits for employers across the United States. We will help you navigate the complexities of these credits and will assist you in the collection of the ERTC. Our experienced team has developed a proprietary methodology that maximizes credits.
How much can you expect to receive?
The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law March 27, 2020, to encourage businesses to keep employees on their payroll.
2020 ERC legislation provided a refundable tax credit of 50% of up to $10,000 in wages paid per employee from 3/12/20-12/31/20 by eligible employers, which can total up to $5,000 per employee.
2021 legislation increased amount to 70% of up to $10,000 in wages paid per employee per quarter for the first 3 quarters of 2021, which can total up to $21,000 per employee.
Eligibility for the ERTC is evaluated on a quarterly basis and is based on an employer’s specific circumstances. An employer is eligible for the ERTC if they experienced either:
1.a full or partial suspension of business operations due to orders from an appropriate governmental authority limiting commerce, travel or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or2.a significant decline in gross receipts (50% decline in gross receipts in 2020 compared to the same quarter in 2019; 20% decline in gross receipts in 2021 compared to the same quarter in 2019).
It’s not too late to file!
- We took the PPP, so are we eligible?Yes. The Consolidated Appropriations Act amended the original CARES Act to permit businesses that received Paycheck Protection Program (PPP) loans to be eligible for the ERTC if they experienced:
A full or partial suspension of business operations due to government orders enacted in response to the COVID-19 pandemic (the “Government Orders Test”)
- We are an essential business, so are we eligible?Yes. The ERTC does not make a distinction between an “essential” or “non-essential” employer. A business, whether classified in state or local orders as essential or not, may be eligible for the ERTC so long as it satisfies the Government Orders Test or Gross Receipts Test. For example, a business that was classified as “essential” by a government order and was able to continue to operate may nonetheless have experienced a partial suspension or a significant decline in gross receipts and be eligible for the ERTC.
- We did not shut down our offices, so are we eligible?Yes. An employer is eligible for the ERTC if it can meet the Government Orders Test or the Gross Receipts Test. The Government Orders Test provides that a business must have experienced a full or partial suspension of business operations due to government orders enacted in response to the COVID-19 pandemic. A “partial suspension” of operations does not mean a complete cessation of operations or closure of locations. Thus, a business can demonstrate a partial suspension of operations through other impacts to operations, such as the inability to perform certain services. Whether a business experienced a full or partial suspension is a facts and circumstances analysis.
- Our operations were suspended, but we were profitable, so are we eligible?Yes. The ERTC does not require a business to experience a decline in revenue to be eligible for the ERTC. The intent of Congress is clear in the plain language of the legislation, which provides that an employer must satisfy the Gross Receipts Test or the Government Orders Test, not both. Thus, a company does not have to experience a decline in revenue to be eligible for the ERTC.
- We are a non-profit, so are we eligible?Yes. The ERTC has always been available to non-profits who satisfy either the Government Orders Test or Gross Receipts Test. The ERTC has benefited many non-profit organizations such as non-profit schools, hospitals, churches and day-care centers.
The Work Opportunity Tax Credit (WOTC) Program was introduced to incentivize businesses to employ applicants who fall into designated target groups. Companies may be eligible to receive $1,200 to $9,600 per eligible employee per year upon hiring, based on the individual’s qualifications.
The WOTC Program can be easy to overlook and difficult to navigate, but it’s probable that you’re already hiring team members who meet the criteria for your business to receive tax credits. On average, 20% of new hires qualify your business for work opportunity tax credits.
The tax credit may be worth up to $9,600 if your company is hiring from any one of the following groups:
- Federal Incentives
The U.S. Government has created a range of incentive programs to encourage small businesses to participate in capital investment, create growth in business sectors, provide jobs in depressed areas and hire individuals who face barriers to employment. Incentive programs include:Work Opportunity Tax Credit (WOTC)Federal Empowerment Zones (Fed EZ)Disaster ERCIndian Employment Credit (IEC)The Federal Insurance Contributions Act (FICA) Tip CreditR&D Tax Credit
- State Incentives
There are also over 3,000 state and local tax credits. These include credits to incentivize economic development, geographic- and hiring-based incentives, research and development credits, investment tax credits, training and retraining credits, discretionary grants and incentives, utility rebates and property tax abatements.