Did you know you could receive up to $5000 per eligible employee for 2020, and up to $7000 per eligible employee per Quarter for 2021?
Which Employers are eligible for the Employee Retention Tax Credit?
An eligible employer is an employer that actively carries on a trade or business during calendar year 2020 or 2021, including tax-exempt organizations, and meets either of the two following tests:
- Government Order Test: An employer is an eligible employer if it experiences a calendar quarter “in which the operation of the trade or business is fully or partially suspended during the calendar quarter due to order from an appropriate government authority limiting commerce, travel or group meetings (for commercial, social, religious or other purposes) due to COVID-19.”
- Reduced Gross Receipts Test: An employer is an eligible employer if it experiences a significant decline in gross receipts.
- For 2020, a significant decline in gross receipts is defined as a decline in gross receipts of at least 50 percent in any calendar quarter in 2020 when compared to the same calendar quarter in 2019.
- For 2021, a significant decline in gross receipts is defined as a decline in gross receipts of at least 20 percent in any calendar quarter in 2021, through September 30, 2021, when compared to the same calendar quarter in 2019.
- If this test is failed, a special rule (alternative method) for 2021 allows the eligible employer to use the gross receipts in the immediately previous quarter compared to the same quarter in 2019 to determine a gross receipts decline of greater than 20 percent.
Gross receipts include all receipts received, regardless of whether the amounts are derived in the ordinary course of the taxpayer’s trade or business.
It’s also important to note that there are affiliation rules that apply to commonly owned businesses which could impact eligibility for the credit.
Do you need help determining if you qualify for the Employee Retention Credit?
Contact our ERTC specialist to help determine your eligibility.