The Employee Retention Tax Credit (ERTC) is a tax credit offered to businesses affected by the COVID-19 pandemic to incentivize them to retain employees. It provides eligible employers with a tax credit of 50% of the qualified wages, including health plan expenses, paid to employees from March 13, 2020, to December 31, 2021, up to $10,000 per employee for the entire year.
The credit applies to most businesses and non-profit organizations that paid wages, tips, commissions and other compensation to W2 employees (not contractors).
If a government order in early 2020 required you to reduce your business's hours of operation, partially suspend operations, or temporarily shutter altogether, but you still paid employees during that time period, you probably qualify for the Employee Retention Credit.
The ERTC is claimed on an employer's quarterly tax return or annual tax return. Employers who received Paycheck Protection Program (PPP) loans can still claim the ERTC, but the same wages cannot be counted for both programs.
You can still apply for the Employee Retention Tax Credit if you received a Paycheck Protection Program loan during the COVID-19 crisis. However, there are a few guidelines in place that may determine whether or not you qualify for the ERC.
The Employee Retention Tax Credit puts money directly back in the hands of business owners who stretched and sacrificed to stay afloat during the most challenging months of the pandemic. For many businesses, the credit could total up to $26,000 per employee. That's real money you can reinvest in your business immediately—and remember, unlike a PPP loan, you don't have to pay your ERC money back.
Depending on your business's situation, the deadline to apply for the ERC could be 2024. But since it could take 16 months (or more!) to receive your money from the IRS, the sooner you apply, the better. Get started today.
If you're business (for profit or non-profit) and have not had your situation examined for the credit you owe it to yourself to see if you can get your share to deploy back into your business to help grow in the aftermath of Covid.