The Employee Retention Credit (ERTC) was created as part of the CARES Act to encourage businesses to continue paying employees by providing a credit to the eligible employer for wages paid to eligible employees. The ERC could be a valuable alternative for those who did not qualify for PPP and other emergency loans. We have compiled a list of frequently asked questions below:

Question: For ERTC eligibility, does the company need to calculate full-time equivalents or just the total of all full-time employees and exclude part-time employees?

Answer: For ERTC, unlike PPP, the employee threshold is determined by looking at full-time employees rather than full-time equivalents. A full-time employee in this case is defined as someone working an average 30 hours per week or 130 hours per month.

Question: What medical benefits can we include for ERTC?

Answer: Health care costs that employers pay on behalf of their employees to provide and maintain a group health plan can be included as qualified costs for determining the credit.

Question: Did the new law change the gross receipts test to a 20% reduction rather than a 50% reduction?

Answer: No, the gross receipts test for the 2020 credit is still a 50% or more reduction in gross receipts when comparing a quarter in 2020 to the corresponding quarter in 2019. The 20% reduction test applies only for the 2021 credit.

If you have any questions regarding ERTC, please feel free to contact us.

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