The Employee Retention Credit (ERC) is part of the CARES Act. It is a fully refundable tax credit that incentivizes employers for retaining staff throughout the COVID-19 pandemic by providing specific tax relief.
Businesses can claim up to $5,000 in refundable tax credits for each employee on their payroll in 2020 and up to a $7,000 credit per quarter (excluding Q4) for each employee in 2021.
Previously, PPP loan borrowers could NOT claim Employee Retention Credits (ERC).
Section 206 of the new Consolidated Appropriations Act (CAA) removes this restriction. However, the same wages that were paid for by the PPP cannot be used to claim ERC. In other words, no “double dipping” of wages is permitted.
Employee Retention Credit Calculator
Find out if you qualify for ERC relief in a few easy steps. AllianceHCM’s easy-to-use Employee Retention Credit Calculator can help you determine if you’re eligible for ERC relief and your max potential benefit based on a few simple questions.
Still have more questions about the ERC Credit? Here are some of the most frequently asked questions about the Employee Retention Credit answered by our tax experts.
Am I eligible for CARES Act Employee Retention Credits?
You can find many Employee Retention Credit eligibility tools online to help you understand if you can receive this credit. However, you can likely claim ERC if:
Your business was impacted or restricted by government orders in 2020 or 2021
Your business experienced a significant decline in gross receipts, as defined by more than 50% in 2020 and more than 20% in 2021
Can I claim ERC if I’ve already claimed a Paycheck Protection Program (PPP) loan or gotten my PPP loans forgiven?
You can claim both Employee Retention Credits and PPP! Consolidated Appropriations Act (CAA) of 2021, removed the limitation on only claiming one or the other.
Can I claim ERC if my business gross receipts did not drop 50% or more?
The CAA has changed the qualifications so that a reduction of 20% now qualifies.
Can I claim ERC if my business was not shut down during the pandemic?
A partial shutdown, a disruption in your business, inability to access equipment, having limited capacity, shutdowns of your supply chain or vendors, reduction in services offered, reduction of hours to accommodate sanitation, shut down of some locations and not others, and shutdowns of some members of a business are all scenarios that still potentially qualify for the ERC.
AllianceHCM payroll and tax professionals can help you better determine if you’re eligible for ERC depending on your unique circumstances.
Can I claim ERC if my company was deemed an essential business?
Even if you were open but your vendors were closed down or you can’t go to a client’s job site, you may still qualify. If part of your business was considered non-essential and was impacted by a government-ordered suspension, you may also qualify.
Can I claim ERC if my business has grown during quarantine?
Great! You still qualify.
Can I claim ERC if I am a charity?
Of course! Churches, nonprofit hospitals, museums all qualify for ERC!
Want to learn more about the Employee Retention Credit and how it can potentially benefit your business? The payroll and tax professionals at AllianceHCM are happy to help you understand the specifics and your eligibility.
