An Overlooked COVID-19 Relief Opportunity Still Available
Small businesses still have a potential COVID-19 relief opportunity available in the form of the Employee Retention Credit (ERC).
What is the ERC?
The ERC was originally a quarterly, refundable tax credit based on wages for business owners to retain staff during the COVID-19 pandemic. It was set at 50 percent of up to $10,000 in qualifying wages per employee for the last three quarters of 2020.
The American Rescue Plan Act extended and expanded the ERC to include up to 70 percent of $10,000 in qualifying wages per employee per quarter in 2021, making it much more lucrative to business owners.
How to Qualify for the ERC
To qualify, businesses need to see a drop in revenue during specific quarters in 2020 and 2021 over 2019, or they have to be operating under significant government restrictions. That could add up to $26,000 per full-time employee over the entire credit.
Businesses that took the SBA’s Paycheck Protection Program also still qualify, with their PPP amount being deducted from what they would get from the credit, which is still a significant amount for many business owners.
Deadline for the ERC
The deadline is until July 31, 2023, to get the full amount. (The credit begins to expire quarter by quarter beginning three years after the due date of the first quarter’s tax return.)
You can visit the latest IRS page on ERC to read their guidance, and it is recommended that you also contact a qualified tax professional for assistance.