Employee Retention Tax Credit

A refundable tax credit encouraging businesses financially impacted by COVID-19 to keep employees on their payroll.

BACKGROUND

The Employee Retention Tax Credit (ERTC) is a refundable tax credit provided as part of the CARES Act to encourage employers to retain their employees during the COVID-19 pandemic. Many employers and various industries including lodging, retail, restaurants, dental and other medical, startups after February 15, 2020, and many others are eligible.

BENEFITS

  • For 2020, ERTC provides a maximum credit of $5,000 for each full-time equivalent employee.
    • This credit is calculated at a rate of 50% of qualified wages up to $10,000 per eligible employee per year.
    • Total maximum credit is $5,000 per employee for the 2020 calendar year.
  • For 2021, ERTC provides a maximum credit of $7,000 for the first three quarters for each full-time employee.
    • This credit is calculated at a rate of 70% of qualified wages up to $10,000 per eligible employee per quarter.
    • Total maximum credit is $21,000 per employee for the 2021 calendar year.

QUALIFICATIONS

  • For 2020, Employers must have less than 100 full-time equivalent employees.
  • For 2021, Employers must have less than 500 full-time equivalent employees.

ELIGIBILITY

Employers, including tax-exempt organizations, are eligible for the credit if they experience either:

  • A full or partial suspension of business operations due to COVID-19 pandemic governmental orders, or
  • A significant decline in gross revenue defined as a 50% decline in 2020, or a 20 % decline in 2021 when compared to 2019.

CLAIMING THE ERTC

If your organization was significantly affected by the COVID-19 pandemic, it may qualify for the ERTC. A formal study is recommended to compare and summarize financials with quarterly revenue from 2019 until 2021.

HOW WE CAN HELP

ICS can provide a complimentary analysis of your organization to determine if the ERTC credits can be beneficial. ICS has successfully claimed the ERTC for many firms, having qualified millions of dollars in tax credits. Our comprehensive ERTC study includes:

  • Yearly and quarterly summary credit amounts
  • Fully prepared Form 941-X
  • Audit protection

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