ERTC Tax Credit Qualifications: Are You Eligible for Employee Retention Benefits?

The “Consolidated Appropriations Act, 2021”, signed into law on December 27, 2020, contained an important change to the CARES Act relating to the Employee Retention Tax Credit (ERTC).

What is the ERTC Eligibility Criteria?

Here’s how it all works:

• Businesses who were under a full or partial government-ordered shutdown at any time in 2020 or who experienced a decline in gross receipts of 50% or more in at least one quarter in 2020 as compared to the same quarter in 2019.
• Businesses with 100 or fewer employees are eligible for the ERTC tax credit. The credit is 50% of wages paid up to $10,000 per person during the shutdown period or during the quarter in which gross receipts were below 50% as well as any subsequent quarter in 2020 up to and including a quarter in which gross receipts exceeded 80% of the same quarter 2019.
• For businesses with more than 100 employees, only wages paid to employees not to work (furloughed) during those periods are eligible for the 50% credit.

The maximum credit allowable per employee in 2020 is $5,000 (50% of $10,000 wages).  This credit can provide significant relief to small businesses that was not available to them until just two weeks ago.  For example, a company with 20 employees may qualify for up to $100,000 in ERTC for 2020 (20 * $10,000 * 50% = $100,000).

The ERTC extends to the first two quarters of 2021, with different criteria for ERTC tax credit eligibility and calculating the credit.  In 2021, if a business experiences a reduction in gross receipts of at least 20% compared to the same quarter in 2019, they qualify for the credit.  The credit is 70% of wages up to $10,000 per quarter in Q1 and Q2 2021.  The company size criteria referenced above also changes from 100 to 500 employees.

How KatzAbosch Can Help

Benefit from KatzAbosch’s industry-leading tax incentives and credits expertise in ERTC tax credit eligibility, a credit we’ve excelled in since its inception in 2020. With our assistance, clients have successfully claimed tens of millions of dollars in ERTC refunds. Our Employee Retention Tax Credit professionals stay up to date with the latest guidance and how any recent changes may affect fillings to secure the best long-term benefits for your business.

If you would like to discuss your Employee Retention Tax Credit strategy, please mention it to your KatzAbosch representative or contact us today.

If you believe your business fits the 2020 ERTC tax credit eligibility requirements, please contact your KatzAbosch representative. We can help you maximize your Employee Retention Tax Credit forgiveness. Learn more about our Tax Incentives & Credits services.