EMPLOYEE RETENTIONAL TAX CREDIT (ERTC)

One of the most important small business tax credits right now is the Employee Retention Tax Credit (ERTC) also known as the ERC.?This credit provides money to employers who retained their employees during the COVID-19 Pandemic.?But how much is this credit worth??

Well, you determine that based on how many employees you had and how much you paid them in 2020 and in 2021.?The calculations can get a bit technical but the maximum you can claim is $5K per employee per year for 2020 and $7K per employee per quarter in 2021.?For example, let's say you had three employees during both years, and you can claim the max for all three of them for both years.?

For 2020, you would receive $15K in ERTC.?For 2021, you would receive $63K, meaning your full credit would be $75K for just three employees.?I don’t know about you, but I know quite a few small businesses that could use that kind of money.?

However, there are some eligibility rules.?They can also get a little complicated, but in a net shell, you can generally qualify under one of two tests.?If your business lost a bunch of money during the pandemic, you likely qualify under the gross receipts test.?

If you had to shut your business down due to COVID orders, restrict your business operations due to COVID orders, or suffered a more than nominal effect from supply chain shortages you likely qualify for the ERTC under the Full/Partial Shutdown Test.?If you would like to know more about the ERTC, my firm has a page on its website completely dedicated to this credit. Also, if you would like to schedule a consultation with one of our knowledgeable tax attorneys, please feel free to visit our website.