Employee Retention Credit (ERC) Assistance

The ERC Is Extended Through 2021.
Save Up To $33,000/Employee

The Employee Retention Credit (ERC) was introduced in 2020 as part of the CARES Act to incentivize employers who kept employees on their payroll during COVID in 2020 and 2021. Recent legislation, including the Consolidated Appropriations Act and American Rescue Act, make the ERC available to you, even if you’ve already received a loan through the Paycheck Protection Program (PPP).

See if you qualify

ERC Form

What is the Employee Retention Tax Credit?

The Employee Retention Tax Credit (ERC) extension provides you with the opportunity to claim a fully refundable payroll tax credit for eligible wages paid to employees during a qualifying period. The ERC is claimed through your quarterly payroll tax filing (Form 941) or an amended quarterly payroll tax filing (Form 941-X). MBS Accountancy is ready to assist you with claiming the Employee Retention Credit. Please complete and submit the information request on this page, and we’ll be in touch with you soon!

Highlights about the ERC

How It Works

Submit our form

Complete the information request on this page so our team can determine whether your organization is eligible to claim the ERC credit.

Review ERC eligibility

After you’ve completed the information request, an onboard specialist will contact you as soon as possible to review your eligibility for the ERC.

Claim ERC savings

If you’re found eligible, we will collect all the necessary documentation and help you claim your ERC savings!

Overview of ERC Eligibility Requirements

2020 ERC Requirements

Your business is fully or partially suspended due to government orders

OR

Your business had a significant decline in gross receipts of 50% or more during 2020 compared to the same quarter in 2019.

  • If 100 or fewer employees in 2019, ERC is determined using all qualified wages paid to ALL employees.
  • If more than 100 employees in 2019, ERC is determined using qualified wages paid to employees for the time they spent not providing services during the affected period.

2021 ERC Requirements

Your business is fully or partially suspended due to government orders

OR

Your business had a significant decline in gross receipts of 20% or more during 2020 when compared to the same quarter in 2019.

  • If 500 or fewer employees in 2019, ERC is determined using all qualified wages paid to ALL employees.
  • If more than 500 employees in 2019, ERC is determined using qualified wages paid to employees for the time they spent not providing services during the affected period.

NOTE: Businesses may elect to compare Q4 2020 to Q4 2019 to determine their Q1 2021 eligibility for the Employee Retention Credit

Popular Questions About The Employee Retention Tax Credit

What is the Employee Retention Tax Credit (ERC)?

The Employee Retention Credit is a refundable tax credit that is applied against certain employment taxes (Social Security, Medicare, etc.) of qualified wages paid by coronavirus-impacted employers.

How does the Employee Retention Credit help tax-exempt organizations?

The Employee Retention Credit and Paycheck Protection Program (PPP) were introduced in March of 2020 as part of the CARES Act to relieve the economic impact of COVID-19 on businesses and nonprofit organizations.

Are tax-exempt organizations really eligible for the Employee Retention Credit?

Yes, tax-exempt organizations like schools, museums, performing arts centers, and churches are eligible to receive the Employee Retention Tax Credit, even if they are a PPP loan recipient.

Doesn’t the CARES Act mean I can’t receive a PPP loan and the ERC tax credit?

Although the CARES Act originally disqualified employers who received a PPP loan from receiving the ERC, the Consolidated Appropriations Act signed in December of 2020 retroactively eliminates this limitation and extends the ERC through the first two quarters of 2021.

This means that nonprofit organizations that had a PPP loan in 2020 can now explore potential ERC savings for 2020 and 2021.

What are the eligibility requirements for the ERC?:

Tax-exempt organizations who wish to claim the Employee Retention Credit must meet one of the following qualifications:

  • The employer must have fully or partially suspended operations due to government orders related to COVID-19. Only wages for the suspension period are eligible.

  • The employer must have experienced a significant decline in gross receipts of 50% or more in gross receipts in 2020 compared with the same period in 2019. Employers are eligible on the first day of the quarter that meets this criterion. Employers are ineligible on the first day of the quarter, in which their gross receipts are more than 80% of receipts for the same period in 2019.

  • In 2021, an organization is experiencing a significant decline in gross receipts of more than 80% for the same period in 2019. Employers may also use the immediately previous quarter to determine their 2021 eligibility.

How much can I receive with the Employee Retention Credit?

The amount of the Employee Retention Credit differs between 2020 and 2021.

For amounts paid between March 13, 2020, and December 31, 2020, the Employee Retention Credit is equal to 50 percent of qualified wages with a maximum of $10,000 in wages per employee for 2020. The maximum credit for 2020 is $5,000 per employee in 2020.

For amounts paid between January 1, 2021, and December 31, 2021, the Employee Retention Credit is equal to 70 percent of qualified employee wages, with a maximum of $10,000 in wages per employee per quarter in 2021. The maximum Employee Retention Credit is $28,000 per employee for 2021.

Can the same wages be used to calculate the amount of PPP loan forgiveness and ERC?

Qualified wages used to calculate PPP loan forgiveness amounts cannot also be used to determine the ERC credit amount. Similarly, wages used to calculate in ERC computations can not be used to determine PPP loan forgiveness amounts.

What are qualified wages?

If you averaged over 100 employees in 2019, qualified wages include employee wages & healthcare costs paid to employees who did not provide services when your operations were suspended or during periods of qualifying decline in gross receipts.

If you averaged less than 100 employees in 2019, qualified wages include wages and healthcare costs paid to any employee when your operations were suspended or during periods of qualifying decline in gross receipts.

Effective January 1, 2021, if you had averaged over 500 full-time employees in 2019, qualified wages include wages paid to employees who did not provide services when your operations were fully or partially suspended or during periods of qualifying decline in gross receipts.

Effective January 1, 2021, if you had averaged under 500 full-time employees in 2019, qualified wages include wages paid to all employees when your operations were fully or partially suspended or during periods of qualifying decline in gross receipts.

Is the Employee Retention Credit available to all companies?

Yes, the Employee Retention Credit is available to any eligible employer, regardless of the size of their company.

Do I have to prove the specific harm or causal relationship to qualify for the Employee Retention Credit?

There is no requirement for an eligible employer to prove specific harm or causal relationships to qualify for the Employee Retention Credit.

If I’ve received PPP funds that have been forgiven, can I still claim the Employee Retention Credit?

If you’ve received PPP funds that are now forgiven, you can still claim the ERC but will need to qualify using qualified wages separate from those used to qualify for the PPP loan forgiveness application.

Using both the ERC and PPP loans to get reimbursement for the same expenses or wages paid in 2020 or 2021 is known as “double-dipping” and is not allowed.

How do I claim Employee Retention Credit amounts from Q1 2020?

If you are determined to be an eligible employer, you can claim credit amounts from Q1 2020 by filing a Q2 2020 941-X form.

Can qualified wages for the Employee Retention Credit include health insurance paid for furloughed employees?

Health insurance expenses paid by an eligible employer during the impacted period can be included when calculating qualified wage amounts for the ERC eligibility.

How can I receive an advanced payment for the Employee Retention Credit?

An eligible employer can receive an advanced payment of the ERC refundable tax credit amounts using Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Can I claim the Work Opportunity Tax Credit (WOTC) and the Employee Retention Credit for the same employee in the same period?

Businesses cannot claim the WOTC and ERC for the same employee within the same period of either 2020 or 2021.

Can I use the same wages to qualify for both the Employee Retention Credit and Paid Family and Medical Leave credit in 2020?

For 2020, you can’t use the same wages to determine your eligibility for both the ERC and Paid Family, and Medical Leave credit.

What are the limitations of the Employee Retention Credit (ERC) eligibility?

The eligibility limitations for the Employee Retention Credit include the following:

  • Gross receipt amounts and employee count must be aggregated
  • The ERC is not available for individuals related to the owners, including children, siblings, parents, all types of in-laws, aunts, uncles, nieces, or nephews.
  • The Employee Retention Credit is also unavailable for any individual who owns 50% or more of outstanding stock.

Are tips considered qualified wages?

Yes, tips can be included when calculating qualified wages to determine eligibility for the Employee Retention Credit. Wages that are countable for Social Security purposes are countable for the ERC as well.

As defined in the IRC 3121(a) and IRC 3231(e), qualified wages includes, but is not limited to:

  • Salaries and wages (this includes cash compensation and non-cash compensation like virtual currencies)
  • Cash tips
  • Bonuses and commissions
  • Vacation pay
  • Employer-provided sick pay (with exceptions)

Is the ERC taxable income?

Based on the information provided in IRS Notice 2020-21, Q&As 60-61; IRS FAQs 85 & 86, the Employee Retention Credit is not includible in gross income. However, the ERC is subject to expense disallowance rules, which effectively make it taxable income.

How do you calculate FTE for ERC tax credit?

Eligible employers that operated a business through every calendar quarter in 2019 can calculate the number of full-time employees (FTEs) by adding up their total number of FTEs in each calendar month and dividing that sum by 12.

In short, the sum of total full-time employees divided by 12 equals the number of full-time employees.

Is the ERC extended?

Yes, the Employee Retention Credit was extended through December 31, 2021, as part of the American Rescue Plan Act of 2021 (ARPA).

When did the ERC start?

The ERC was originally enacted in March of 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). It was later expanded in 2021 with the passage of the American Rescue Plan Act Of 2021, also known as ARPA.

How do you record the ERC income for accounting purposes?

According to IRS COVID-19-Related Employee Retention Credits: Special Issues for Employers FAQs, the ERC credit amounts should be recorded as a reduction of deductible payroll expenses.

When can I claim the ERC?

For 2020, you can claim the employee retention credit if you paid qualified wages (including both health insurance and payroll costs) to full-time employees between March 12, 2020, and January 1, 2021, and also experienced a full or partial suspension of operations due to government orders or had a significant decline in gross receipts. See IRS Notice 2021-20 for more information.

Does the ERC have to be repaid?

No, you do not need to repay the ERC. But, if you used Form 7200 to receive a tax credit advance, you must account for that advanced amount when filing your federal tax return.

See if you qualify

ERC Form