2021 Advance Child Tax Credit PaymentsJuly 9, 2021
IRS Penalty Relief Spotlight: First-Time AbatementSeptember 24, 2021
Understanding the ERTC
: the ERTC is a refundable payroll tax credit aimed to relieve the financial stress from Covid-19.
The ERTC was first created by the CARES Act in 2020 but excluded employers who received the PPP. New Changes to the ERTC allowed PPP employers to qualify and changed the rules of eligibility.
The amount of your ERTC is dependent upon several complex factors. However, the maximum ERTC for qualifying businesses is:
- 50% of employee wages in 2020 up to $10,000 in wages for each employee for each quarter – totaling up to a $5,000 refundable credit per employee per quarter.
- 70% of employee wages in 2021 up to $10,000 in wages for each employee for each quarter – totaling up to a $7,000 refundable credit per employee per quarter.
- The credit maximum is $33,000 per employee (2020 + 2021) for severely impacted businesses.
While these calculations seem complex, they also rely on numerous involved factors. At Butrica Ployd, we simplify this process by screening your eligibility and preparing all calculations and documentation you may need. As a first step, learn more about your eligibility.
Eligible businesses include most employers including nonprofits. In order to qualify, your business must meet 1 of 3 qualifications:
Significant Loss in Gross Receipts
- For 2020, at least 50% decline in gross receipts compared to the same quarter in 2019.
- For 2021, at least 20% decline in gross receipts compared to the same quarter in 2019.
Full or Partial Shutdown due to Government Order
- "Must have had a more than nominal impact on your business operations."
- Impact to your business may be indirect - resulting from orders restricting vendors or suppliers.
- This does not include those with the ability to work remotely in a comparable manner or those who chose to restrict business operations.
Began a new trade or business after February 15, 2020 (Q3 and Q4 2021 only)
- A new trade includes a significantly different product or service.
- The business must average gross receipts of less than $1,000,000 over the prior 3 years
- Must be for profit and spend time on it regularly - does not include "hobbies".
If you believe your business may be eligible, contact us by visiting www.bpacpas.com/contact-us.
In just over 12 months, small business owners outlasted shutdowns, raced to emergency relief programs, and learned to adapt in unexpected ways. If you are a small business employer that experienced the consequences of Covid-19, you may be eligible for a refundable Employee Retention Credit of up to $33,000 per employee.