Frequently asked questions about ERC

  • What is the ERC? The Employee Retention Credit (ERC) is a refundable tax credit designed to encourage businesses to keep employees on their payroll during the COVID-19 pandemic.
  • How much is the ERC worth? The ERC can be worth up to $26,000 per employee, depending on the eligible quarters and the number of employees retained.
  • Who is eligible for the ERC? Businesses that experienced a significant decline in gross receipts or were fully or partially suspended due to a government order may be eligible for the ERC.
  • Is ERC available for 1099 contractors? Regrettably, this program is exclusively available for businesses that have provided W2 wages to non-owners.
  • Can businesses claim the ERC if they received a PPP loan? Yes, businesses that received a PPP loan can still claim the ERC, but not for the same wages used to qualify for forgiveness under the PPP.
  • How do businesses claim the ERC? Businesses can claim the ERC by filing Form 941 for each quarter they qualify and claiming the credit on their payroll tax returns.
  • Our income has not decreased, are we still eligible? Yes! To be eligible for the Employee Retention Credit, you must have either experienced a fully or partially suspended operation due to COVID-19 orders from a governmental authority OR a significant decline in gross receipts (at least 20% reduction compared to the same quarter in 2019). A decrease in income alone does not determine eligibility.
  • What if I already filed my taxes for the year I am applying for ERC? You can file an amended tax return to claim the ERC credit.
  • What documentation is required to claim the ERC? Businesses must keep documentation to support their claim for the ERC, including records of gross receipts, government orders, and employee retention.
  • Is the ERC a loan that needs to be repaid? No! The ERC program is not a loan and does not need to be repaid. It is a tax credit that can be applied to payroll taxes owed to the IRS.

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