Employee Retention Tax Credit

Employee Retention Tax Credit

The Employee Retention Tax Credit (ERTC) is a refundable tax credit designed to reward and encourage businesses to keep their employees on payroll.

Who’s Eligible for The Employee Retention Tax Credit?

Private businesses or tax-exempt organizations of all sizes that conduct a trade or business and meet one or both of the following criteria:

  1. Your business was forced to partially or fully suspend or limit operations by a governmental order.
  2. Your business experienced a 50% decline in gross receipts during any quarter in 2020 versus the same quarter in 2019, and/or 20$ decline in gross receipts during any quarter in 2021 versus the same quarter in 2019.

How To Claim ERTC

We strongly recommend that you speak with a Certified Public Accountant (CPA). A CPA can help your business maximize the value of the ERTC. If you do not currently have one, visit www.limitlessinvestmentandcapital.com

  • To claim the credit retroactively, file a Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return
  • To claim the credit currently, file a Form 941, Employer’s Quarterly Federal Tax Return
  • To claim the credit in advance, file a Form 7200, Advance Payment of Employer Credits Due to COVID-19

How To Calculate The ERTC Credit

  1. Determine what quarters of 2020 and 2021 your business qualifies for the ERTC: Was your business ordered by the government to partially or fully suspend operations; or Did your business experience a drop in gross receipts of at least 50% (2020) or 20% (2021) vs. the same quarter in 2019?
  2. Determine The Total Qualified Wages: Include allocable qualified health plan expenses, paid to each employee per quarter. Do not include wages that have been used toward PPP forgiveness.
  3. Calculate Tax Refund in 2020: Apply a cap of $10,000 of qualified wages per employee across all quarters combined. Multiply the qualified wages up to the annual cap by 50% to determine your credit amount for 2020. The max is $5,000 per employee for the entire year.
  4. Calculate Tax Refund in 2021: Apply a cap of $10,000 of qualified wages per employee per individual quarter. Multiply the qualified wages up to the quarterly cap by 70% to determine your credit for each quarter in 2021. The max is $7,000 per employee per quarter.

Contact The Limitless Team

Need help determining if your company qualifies for the Employee Retention Tax Credit? Contact the Limitless Team today!