ERC Program Up To $26,000 Tax Refund

Any wages that are subject to the FICA tax are eligible, and qualified medical expenses may be included in calculating ERC plans. You cannot claim wages of specific individuals that are related to you, either, but you can claim wages paid to employees. ERC credits are calculated on a basis of the eligible wages paid to employees while in qualified employer status.

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he Employer Retirement Credit (ERC) continues to provide a broad range of employers with profitable refundable payroll tax credits on qualifying wages paid to employees for the years 2020 and 2021. For the majority of companies that avail themselves of the program, ERC credits are far greater than the payroll taxes paid by employers. ERC is a refundable payroll tax credit, which could be up to $5,000 per employee in 2020, and up to $21,000 per employee in 2021.

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The ERC is a return that takes the form of a subsidy, and it can refund as much as $26,000 per employee ($11,000 is average) depending on wages, healthcare, and other payroll expenses business owners already paid. The ERC gives qualifying employers a payroll tax credit on wages and health care paid to employees. Qualified wages for ERC purposes include that part of a group health plans costs, including both the employers contribution and a employees contribution before taxes, that would be allocated toward otherwise eligible wages.

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Below, weall go deeper on what makes an employer eligible, what counts as qualifying wages, and weall go over examples on how to compute an employees retained compensation credit. For example, if youare using the Paycheck Protection Program loan funds to cover $50,000 in wages, and expect to be eligible to receive loan forgiveness under PPP, then you couldat use $50 to compute your ERC.

Because the Employee Retirement Credit expires at the end of 2021, the only way to claim it going forward is to file a modified Form 941X from the prior quarter when you were eligible for the wage tax credit but did not claim it. For 2021, the threshold was raised to 500 full-time, full-year employees in 2019, giving employers much greater flexibility on who they could claim under the ERC plan.

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For 2021, the refundable tax credit is 70% of up to $10,000 of eligible wages paid in one quarter by an eligible employer whose business was materially affected by COVID-19. For 2021, the ERC is equal to 70 % of up to $10,000 of qualified wages (including amounts paid toward health insurance) for each eligible calendar quarter beginning January 1, 2021, and ending December 31, 2021. ERC Today is a staffing credit service that helps companies assess their eligibility, perform comprehensive analyses of their claims, provide guidance about the claims process and documentation, provide special expertise in a program in which your typical CPA or payroll processor may be less knowledgeable, and perform an expedited, seamless, end-to-end process, from eligibility, through claims, to reimbursement, and back.

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According to the National Federation of Independent Business (NFIB), only 4% of small business owners are familiar with the ERTC program and many are asking what is ERTC. However, this little-known government aid has massive benefits for businesses.

To qualify and be an eligible employer you must be able to prove that your business was negatively impacted in one or more of the following ways: Your business experienced a partial or total shutdown during 2020 or 2021 (includes being limited by commerce, inability to travel, or restricted group meetings), or gross receipt reduction (a business may be eligible for one quarter and not another).

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To apply for the Employee Retention Tax Credit, employers must complete and file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, with their quarterly federal tax return. For more information on how to apply for employee retention credit, we recommend talking to ERC Assistant to see if you qualify. You can also take this 60-second quiz to start the ERC application process today.