Q: Is my business eligible for the Employee Retention Tax Credit (ERTC)?
–Hopeful Business Owner
A: Dear Hopeful:
If you did not take a PPP loan, you may be eligible for ERTC. This tax credit is worth 50% of qualifying wages, with payment up to $10,000 per employee. The credit applies to wages paid from March 13, 2020 through January 1, 2021.
You are eligible for the ERTC if your business or nonprofit meets one of two conditions: 1) your business operations were fully or partially suspended as a result of government-mandated COVID-19 shutdown orders, or 2) your business experienced a decline in gross receipts of more than 50% in a quarter compared to the same quarter in 2019. Eligibility for the second condition ends if your gross receipts in a quarter exceed 80% compared to the same quarter in 2019.
You don’t have to wait until the end of the year to claim this credit, and you can file it on your quarterly Form 941. Note that you cannot claim the same employee for the ERTC and the Work Opportunity Tax Credit during the same period.
If you’d like to review your tax strategy, reach out to a Family Business Lawyer™ and schedule a time to review your finances and make adjustments that will help you come tax time.