Still time to claim the Employee Retention Credit for 2021

Although the Employee Retention Tax Credit (ERTC) is expiring at the end of 2021, there's still time for eligible businesses to claim the credit, if they haven't already.

Eligible employers are still able to take advantage of the employee retention credit against applicable employment taxes and qualified wages paid to their employees through Dec. 31, 2021.

Although the program is set to sunset at the end of 2021, the credit can be claimed on amended payroll tax returns as long as the statute of limitations remains open, which is three years from the date of filing.

ERTC Basics

The ERTC, also referred to as the Employee Retention Credit (ERC), was created by the Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law in March 2020, to encourage businesses to keep employees on their payroll. The Consolidated Appropriations Act, 2021 (CAA), enacted in December 2020, and the American Rescue Plan Act (ARPA), enacted in March 2021, amended and extended the credit and the availability of certain advance payments of the credits through the end of 2021.

The ARPA, for instance, allows small employers that received a Paycheck Protection Program (PPP) loan to also claim the ERTC.

For 2021, an employer can receive 70 percent of the first $10,000 of qualified wages paid per employee in each qualifying quarter, raised from 50 percent in 2020. The credit applies to wages paid or incurred from March 13, 2020 through Dec. 31, 2021.

Eligible Businesses

There is no size limit on eligibility for the ERTC. However, small and large businesses are treated differently:

  • For employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shutdown order.

  • For employers with more than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to COVID-19-related circumstances.

Eligible employers are private-sector businesses and tax-exempt organizations that experienced:

  • A full or partial shutdown of operations as a result of a government order limiting commerce due to COVID-19 during 2020 or 2021 or

  • A gross receipts decline of more than 20% (50% in 2020) during a 2021 calendar quarter when compared to the same quarter in 2019.

Give us a call today to determine if your business qualifies for the credit.
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