What is the Employee Retention Credit?
Developed during the COVID-19 pandemic, the Employee Retention Credit is a government stimulus program designed to support businesses that were impacted by the pandemic, but continued to retain some or all of their employees.
The ERC is a cash credit, not a loan, and there are no limits to how you may use the funds.
Frequently Asked Questions
How much could I be eligible for?
The CARES Act's Employee Retention Credit is a fully refundable tax credit. For the 2020 program, the ERC is equal to 50% of qualified wages (including allocable qualified health plan expenses) that eligible employers pay their employees. This applies to wages paid after 3/12/2020 and before 1/1/2021.
The maximum amount of wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an employee is $5,000.
For the 2021 program, the credit is increased to 70%, and the limit is $10,000 per quarter for the first 3 quarters of 2021. This means the annual maximum for an employee is $21,000.
The tax credit offsets all withheld federal employment taxes including federal income tax withholding, Employer FICA and Medicare. Any excess credit will be refunded or advanced by the IRS.
How will I use a tax credit?
This program is not an "income tax credit" and not related to your annual business tax returns or your profit/loss from the business. Although it is called a tax credit, it is most frequently received as a cash payment from the IRS. You may also use it to offset future payroll tax payments.
How much does it cost to determine if I'm eligible?
The initial analysis to determine your eligibility and approximate credit is entirely free. Our process is entirely contingent with no up-front costs – we only bill out of actual, realized dollars you receive.
Is there a deadline to apply?
The Employee Retention Credit is accessed by filing a 941-X Amended Quarterly Payroll Tax return. The IRS will accept these for up to three years after the initial filing, so the ability to participate in ERC program may continue into the end of 2024.
