Employee Retention Tax Credit (ERTC)
For businesses that were negatively affected by the COVID-19 pandemic, the federal government has offered a significant opportunity for financial relief: the Employee Retention Tax Credit (ERTC). Created in March 2020 by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, this fully refundable tax credit was subsequently amended three times throughout 2021. While the ERTC is only available for wages paid through September 30, 2021, there is still time for eligible employers to claim this lucrative credit.
What is the Employee Retention Tax Credit?
Designed to incentivize employers to keep their employees on the payroll during the pandemic, the ERTC provides cash-flow relief in the form of a refundable employment tax credit, up to $5,000 per employee for 2020 and up to $21,000 per employee for 2021. For many employers, this translates to hundreds of thousands—or even millions—of dollars in tax credits.
Since the ERTC is “refundable,” employers will receive a refund for the difference if the amount of the credit is larger than the tax they owe. For example, if a business owes $10,000 in taxes and qualifies for a credit of $100,000, they will receive a $90,000 refund after offsetting/eliminating the $10,000 tax.
Who is eligible for the ERTC?
Since the ERTC was intended to aid those businesses that were most impacted by pandemic-related restrictions, it is available to the following organizations:
- Businesses whose operations were fully or partially suspended due to a COVID-19-related governmentorder; OR
- Businesses that experienced significant declines in quarterly gross receipts in 2020 or 2021 compared to the same quarters in Businesses that made a profit during these times may also be eligible under certain circumstances.
- Businesses with up to 500 W-2 employees may qualify.
Claiming the ERTC
For eligible businesses, working with an experienced tax advisor is the key to maximizing refundable tax credits through the ERTC. Relying on your primary CPA may not yield optimal results, as many CPAs are consumed with tax filings and are not up to date on the most recent changes to the ERTC.
At Capital Review Group, our team of tax professionals has helped our clients recover millions of dollars through the ERTC. We will determine whether your business is eligible and guide you through the process of claiming the credit, with a goal of minimizing your tax burden and increasing your cash flow. If you think your business may qualify for the ERTC, now is the time to act—there is a three-year limit imposed for filing. Contact us today to schedule a consultation!
Have more questions about claiming the ERTC? Find answers by downloading our ERTC Q&A sheet.