Employee Retention Tax Credit: Is my business eligible?

Four businesses operational during the height of the COVID-19 pandemic, staying afloat and keeping employees working was an incredible feat. Even with public health precautions dialing back, businesses are still fighting for employee retention amongst higher than-ever job vacancies.

The Employee Retention Tax Credit (ERTC), created under the CARES Act, is the government's response for those businesses. It rewards businesses and organizations who kept employees during the COVID-19 pandemic with up to $26,000 per employee.

Amid current economic challenges, this might be the kind of opportunity you cannot afford to pass up.

Who is eligible?

You are eligible to apply for the ERTC if you:

• Own / operate a private business or tax-exempt organization that conducts a trade or business.
• Paid wages between March 13, 2020, and December 31, 2020
• Have between 5-500 W2 employees

And have faced at least one of the following criteria:

• You were forced to partially or fully suspend or limit operations by a federal, state, or local governmental order.
• You experienced a 50% decline in gross receipts during any quarter of 2020 versus the same quarter in 2019, and/or a 20% decline in gross receipts during 2021 against the same quarter in 2019.

Additionally, if your business or organization started in 2020, you will use 2020 as your comparison period when applying for the tax credit for 2021.

Your bookkeeper has until April 15, 2024, to file amended returns for Q2, Q3, and Q4 of 2020, and until April 15, 2025, to file amended returns for all 2021 quarters. However, with rising prices and the threat of a recession, there is no time like the present to take advantage of this tax credit.

Work with a professional.

When it comes to taxes, you want to make sure you're doing everything correctly. If you don't have a professional on staff with experience, engage a firm that specializes in business taxes. A dedicated specialist will ensure everything you do is IRS compliant, as well as save you time and stress.