The Employee Retention Tax Credit (ERTC) is a refundable payroll tax credit for wages paid by an employer whose operations were affected by COVID-19. Employers may use ERTCs to offset the employer’s federal payroll tax deposits.
Employers are eligible if they actively carried on a trade or business during the calendar years 2020 or 2021, including tax-exempt organizations, and meet either of the two following tests:
- The employer experienced 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 due to COVID-19.”
- The employer experienced a decline in gross receipts in 2020 or 2021, as follows:
- 2020 – 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.
- 2021 – 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
- For 2021 you can also 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.
Affiliation rules for commonly owned businesses could impact the eligibility for the credit.
We welcome the opportunity to discuss with you the qualifications and possible benefits. Please contact us with any questions or if you think you may qualify.
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