Employee Retention Credit
The Employee Retention Credit (ERC) 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 refundable credit is available from March 13, 2020 through September 30, 2021 and can be utilized even if companies received PPP loans. Businesses that started up after February 15, 2020 are eligible for up to $100,000 of credits on wages paid from June 1, 2021 through December 31, 2021.
KROST is providing the following services to assist with ERC:
- Determine if the employer qualifies, and if so, for which quarters
- Determine which employee wages qualify
- Calculate credits, including analysis of PPP interplay
- Reconcile actual credits with advance credits requested
- Prepare reconciled data for Form 941-X
- Prepare documentation supporting eligibility
Recipients of PPP loans are now eligible to qualify retroactively for the credit in 2020 and 2021.
(On March 11, 2021, President Biden signed the American Rescue Plan Act, extending the ERC through the end of 2021. » READ MORE)
For 2021, there is a maximum credit of $7,000 per eligible employee, per quarter. The 2021 credit is computed at a rate of 70% of qualified wages paid, up to $10,000 per eligible employee, per quarter. For Eligible Employers with less than 500 average full-time employees in 2019, the credit is available for all employees receiving wages in 2021.
For 2020, there is a maximum credit of $5,000 per eligible employee. The 2020 credit is computed at a rate of 50% of qualified wages paid, up to $10,000 per eligible employee for the year. For Eligible Employers with less than 100 average full-time employees in 2019, the credit is available for all employees receiving wages in 2020.
An Eligible Employer (including all members of a control group) must either:
1. Have their operations fully or partially suspended due to orders from a governmental authority
2. Suffer a significant decline in quarterly gross revenue as measured against 2019
• 50% decline for 2020
• 20% decline for 2021
A governmental employer is not eligible.
Have questions about COVID-19 relief? Visit our COVID-19 Resource Center for more information.
Additional rules and limitations apply.
Download a Copy of Our Employee Retention Tax Credit Services Handout