By Matt Krenik
You may have heard other businesses talking about Employee Retention Credits (ERC) and wondered about your potential savings but just haven’t had the time to look into it yet. Or maybe you are figuring it’s too late to get started with ERC. We have news for you – it’s NOT too late! In fact, you may be missing out on up to $26,000 per employee in the form of payroll tax credits.
As a result of the pandemic, businesses struggled when they were forced to shut down or change the way they operated their business. If your business was affected by a government order OR you suffered a drop in revenue, you may be eligible for significant payroll tax credits under the ERC.
While it may seem like a maze to understand and apply tax credits of any sort, determining your ERC eligibility does not have to be difficult. Start by answering these questions:
Was your business fully or partially suspended by government order in any quarter in 2020 or 2021?
Did you experience a reduction in gross receipts in any quarter during 2020 or 2021 compared to the same quarter in 2019?
Answering yes to one or both of these questions is a great indicator your business may be eligible for the ERC. Obviously, it’s not as simple as that, but this is a great starting point for qualification.
If your business is eligible for this significant tax credit, you have up to three tax years to amend your quarterly tax filing using Form 941-X, which means the opportunity is still available. Factors that influence the potential credit you could receive include:
Federal, State, and Local Government Orders and their expiration.
Your quarterly 2020 and 2021 Gross Receipts compared to the same quarters in 2019.
The number of full-time employees you had in 2019.
Qualifying employers may claim up to $5,000 per employee in 2020, and up to $7,000 per employee, per quarter, in Q1-Q3 2021. This means you could potentially qualify for $26,000 per employee!
Please note that there are a few exceptions to keep in mind when calculating your ERC. There are employees who may not qualify. Also, there is a prevention of double dipping for the same employee during the same time period for some programs. Those programs include:
Paycheck Protection Program (PPP)
Work Opportunity Tax Credit (WOTC)
Expanded Family Medical Leave Act (EFMLA) Credit
Emergency Paid Sick Leave Act (EPSLA) Credit
Helping you with ensuring that the ERC is maximized in conjunction with these programs is part of the expertise our team helps bring to the analysis.
It’s time to start looking at maximizing your tax savings without hindering your strategic priorities at work. Don’t let the qualification and quantification of the ERC add to your mountain of administrative work; instead, let our team help do the legwork for you. Further, we stand behind our work and help provide audit defense as well (i.e., with IRS exams and appeals*). The subject matter experts at HIREtech, an Equifax company, have a proven track record in helping businesses like yours with their team that includes PhDs, Engineers, and Tax Specialists.
To learn more about ERC credits and how Equifax Workforce Solutions and HIREtech could help you determine and apply for these credits, download ERC FAQ or contact us for more information.