Changes in the second spending bill passed in December 2020, expanded the scope and size of the Employee Retention Tax Credit (ERTC) program. The bill created access to more money for businesses struggling to stay afloat during the pandemic, even for those that applied for and received a PPP loan.
The ERTC has changed several times since December of 2020, so it can be a little confusing to determine where things stand today.
How does the credit work?
The ERTC is a credit that provides tax relief for companies that lost revenue in 2020 and 2021 because of the pandemic. Companies can receive as much as $7,000 per employee, per quarter, for four quarters in 2021. And they might also qualify for a break of $5,000 per employee for all of 2020.
Who’s eligible?
It’s hard to find a business that doesn’t meet those criteria. The ERTC was put in place to support small businesses with a decrease in revenue of at least 50% compared to the same quarter in 2019, and those impacted by government shutdown orders at the federal, state, or local level.
Although the Employee Retention Tax Credit only applies to wages paid or incurred through December 31, 2021, employers can claim the credit on amended payroll tax returns as long as the statute of limitations remains open, which is three years from the filing date.
While businesses of all sizes are eligible, small and large businesses are treated differently, which makes the application process complicated. If you have questions, need information, or guidance, reach out to the professionals at Boris Benic and Associates.