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:
- Your business was forced to partially or fully suspend or limit operations by a governmental order.
- 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
- 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?
- 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.
- 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.
- 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!