Employee Retention Credit - A Reminder
Reminder to Clients and Friends about the Employee Retention Credit (ERC)
The Consolidated Appropriations Act of 2021 (the “Act”) which was signed into law in December 2020 allowed entities that have a PPP loan to also take advantage of the ERC in 2020 and 2021. If an entity qualifies, it must not use the same wages that were forgiven via the PPP loan as part of the ERC calculation. As a reminder, in order to qualify for the ERC in 2020, quarterly 2020 revenues must have been reduced by at least 50% as compared to the same quarter in 2019. The credit is then reflected on amended quarterly tax returns.
The Act along with the American Rescue Plan that was signed into law in March 2021 extended this credit to all four quarters of 2021 and reduced the revenue reduction requirement to at least 20% for 2021. This calculation would compare 2021 quarterly revenues to 2019 quarterly revenues for the similar quarter. If any quarter of 2021, revenues were down by 20% or more, then you potentially qualify for the credit. This credit for 2021 is now 70% of eligible wages up to $10,000 per employee per quarter.
The end of Q2 2021 is upon us and you should evaluate whether your entity qualifies for the credit for both Q1 and Q2 of 2021.
If you have any questions or would like to find out if your Company qualifies for the ERC in Q2 or retroactively to March 2020, give us a call to discuss or contact us online.
This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.
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