By Kathy Bazan, BRC Consultant
January 17, 2021
When the Employee Retention Tax Credit (ERC) was included in the CARES Act last March, it was a boon to small business owners. In the latest stimulus package signed into law in late December, the ERC was improved. Here is a brief recap:
| Feature | 2020 ERC | 2021 ERC |
| Covers | 50% of qualified wages | 70% of qualified wages |
| Covers per employee | $10,000 of qualified wages per year | $10,000 of qualified wages per quarter to 6/30/21 |
| Credit per employee | Up to $5,000 ($10K x 50%) |
Up to $14,000 ($20K x 70%) |
| Can you get PPP & ERC? | Yes, retroactively | YES! |
| Reduced year-over-year gross receipts decline by | 50% | 20% |
| Use prior-quarter gross receipts to determine eligibility? | Yes | Yes |
| How do you qualify for this credit? |
· Your business was partially or completely shut down by order. · Or your gross receipts declined by 50% when comparing a quarter of 2019 to same quarter in 2020. · You paid/will pay federal and state payroll taxes. |
· Your business was partially or completely shut down by order. · Or your gross receipts declined by 20% when comparing a quarter of 2019 to same quarter in 2020. · You paid/will pay federal and state payroll taxes. |
If you have fewer than 100 employees, then the credit applies to all employee wages paid. If you have more than 100 full time employees, the rules are different.
To learn more and to calculate your ERC, click here: https://quickbooks.intuit.com/r/coronavirus/employee-retention-credit-calculator/#:~:text=The%20Employee%20Retention%20Credit%20is,employee%20during%202020%20is%20%245%2C000.
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