What Makes A Business Eligible?
For certain employers who were greatly affected by COVID-19 where gross receipts for any 2020 quarter were less than 50% for the same quarter in 2019 or less than 80% in 2021 are considered eligible for the Employee Retention Credit (ERC).
For 2020, an employer can receive a credit equal to 50% of the first $10,000 of Qualified Wages paid per employee in the aggregate for all qualifying quarters. Max. being $5,000 per employee.
For 2021, an employer can receive 70% of the first $10,000 of Qualified Wages paid per employee in each qualifying quarter. Max. being $7,000 and $28,000 per employee.
What Counts as a ‘Qualified Wage’?
For small employers: all wages paid to and ‘Qualified Health Plan Expenses’ paid for employees for the applicable quarter.
Qualified Health Plan Expenses: amounts are paid or incurred by an employer to maintain a group health plan that are allocable to Qualified Wages. This amount includes employer payments and employee contributions made on a pre-tax basis (even furloughed employees).
The definition for “small” employer is also different for 2020 and 2021:
2020: For 2019, consists of 100 or fewer full-time employees (avg. 30 hrs. per week or 130 hrs. per month).
2021: For 2019. consists of 500 of fewer full-time employees
Who Else Can Claim ERC?
Under the December Act, recipients of the PPP loan are also eligible to claim ERC. However, the same wages cannot be used to qualify for PPP forgiveness and as ERC wages.
To find out more, keep reading below: