Frequently Asked Questions

Answers to everything you’ve wanted to know about the Employee Retention Credit

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What is the Employee Retention Credit (ERC)?

The ERC is a refundable payroll tax credit that the U.S. government authorized as part of the 2020 CARES Act. It provides financial relief to small and medium-sized businesses that retained employees through the COVID-19 pandemic. If eligible, employers can claim up to $5,000 per W-2 employee for 2020 and up to $7,000 per W-2 employee for Q1, Q2 and Q3 of 2021–for a total ERC credit of $26,000 per employee.

Who qualifies for the ERC?

Eligible Employers can file for the ERC. To be considered eligible, they must have operated a trade or a business in 2020 and experienced either:

  1. A significant decline in gross receipts compared to the same period in 2019, OR
  2. A full or partial suspension of operations by a government order.

Employers in nearly any industry, deemed essential or non-essential, can qualify for the ERC, including:

  • Education
  • Healthcare and Life Sciences
  • Hospitality and Retail
  • Industrial
  • Religious and Nonprofit
  • Finance
  • Real Estate and Construction
  • Technology

What are qualified wages, eligible periods, and gross receipts?

Qualified Wages are wages paid to employees during times when an employer is considered eligible to earn Employee Retention Credits (i.e., Eligible Periods). Gross Receipts refer to sources of business income, such as payments received in exchange for goods or services, dividends, rents, interest and royalties.

How do I know if I’m a small employer?

  • For the 2020 ERC, a small employer is one with 100 or fewer full-time employees.
  • For the 2021 ERC, a small employer is one with 500 or fewer full-time employees.

A full-time employee is one who averaged at least 30 hours of service per week or 130 hours of service per month.

Does the Employee Retention Credit count only for full-time employees?

No. ERC calculations include wages paid to part-time employees as well!

Do ERC qualified wages include tips?

Yes, as long as they exceed $20 per calendar month per employee. Because these wages are subject to FICA, they are included in ERC calculations.

Can I claim the ERC if I received a PPP loan or other tax credits?

Yes, just not on the same employee wages. The government allows you to claim only one tax credit per eligible period. If you file with us, we’ll look for every penny you can rightfully claim and still remain 100% shielded from audit. The good news is that different tax credits often cover different types of expenses and eligibility periods, so you’re still likely to get an ERC refund.

Can I qualify for the ERC even if my revenue went up?

Yes! A decline in revenue is not required to qualify for the ERC. If you can show that your business was more than nominally (10%) impacted by COVID-related restrictions or disruptions, you will qualify under the Government Mandate Test.

Do I have to pay it back?

No! The ERC is a refund of your payroll taxes. It is not a loan and does not have to be paid back, even if you receive more from the IRS than you paid in taxes.

What can I use my refund for?

Anything you want. It’s your money! Many business owners use the funds to pay off debt, invest in new equipment, hire more employees, take a vacation, or even get a head start on next year’s taxes.

Will I have to claim the ERC refund as income on my federal taxes?

No. But you will have to reduce your deductions for wages on the tax return for the year(s) that you claim the ERC. Talk to one of our CPAs or your personal tax advisor if you have questions about this.

What if I own multiple businesses?

Separate businesses under common ownership that meet IRS Controlled Group criteria must be evaluated together for eligibility. If they pass the tests, all entities are eligible; if not, none are eligible. The ERC is then calculated and filed for each separately.

If I use a PEO instead of a traditional payroll tax provider, can I still claim the ERC?

Yes.

Why can’t my personal CPA help me file for the ERC?

Many CPAs aren’t aware of the new rules regarding the Employee Retention Credit. Some believe you can’t qualify at all without a sizable loss in revenue. However, filing for the ERC is all we do. Not only can we qualify your business and maximize your refund, your CPA can earn some cash through our partnership program for referring their other ERC clients to us.

When does the Employee Retention Credit expire?

Technically, the ERC expired on September 30, 2021. However, businesses can file retroactively for the 2020 credit until April 15, 2024, and for the 2021 credit until April 15, 2025.

How long will it take to get my refund?

It has taken our clients three to six months to receive their refund from the IRS, and wait times are decreasing! However, wait times could increase later on as the deadline to apply draws closer. We recommend submitting your ERC application as soon as possible to receive your refund in the most timely manner.

When do we pay your fee?

When you receive your refund from the IRS.

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Our Address

1825 NW Corporate Blvd, Boca Raton, FL 34331

Email

info@ercbenefits.com

Phone

561-680-4677