The most lucrative tax break available to businesses right now could save your business up to $33,000 per employee. Unfortunately, many business owners are disqualifying themselves based on outdated guidelines.

The Employee Retention Credit (ERC) tax credit was originally created to help employers impacted by COVID-19. Congress has updated the eligibility requirements several times to expand eligibility and increase the amount of funding available.

Even if your organization didn’t qualify before, you may be eligible to receive millions of dollars back in tax credits this year!

You can still qualify even if you:

  • Claimed PPP
  • Did not see a drop in revenue
  • Were deemed an essential business
  • Were significantly impacted by nearly any type of COVID-related government orders

It’s a good idea to check the updated requirements to see if you can get some money back on payroll taxes. Contact an LG Resources ERC specialist today to find out how much you are eligible to get back through the ERC program.

The New ERC Tax Credit Eligibility Rules

tax credit

The Employee Retention Credit is a refundable tax credit based on the percentage of qualified wages that eligible employers pay to employees. It’s available to employers that were significantly impacted by COVID or related government orders in a wide variety of ways.

Here are just a few of the many types of COVID disruptions that could make your organization eligible for this tax credit:

  • Reduced hours of operation
  • Full or partial shutdowns
  • Interrupted operations
  • Supply chain disruptions
  • Inability to access equipment
  • Limited capacity to operate
  • Inability to work with your vendors
  • Reduction in service or good offered to your customers
  • Shifting hours due to COVID precautions
  • A 20% drop in revenue in 2021 compared to the same quarter in 2019, or a 50% drop in revenue in 2020

If you had to alter your day-to-day work in any way due to the pandemic, you are likely well-positioned to receive federal funding to invest back into your business. Don’t assume you aren’t eligible, even if you didn’t qualify before!

How Much Is the Tax Credit Worth?

Eligible employers can receive:

  • 50% of up to $10,000 of qualifying 2020 wages per employee for the year (maximum credit = $5,000 per employee ).
  • 70% of up to $10,000 of qualifying 2021 wages per employee per quarter (maximum credit = $28,000 per employee)

If a company qualifies for credit in both 2020 and 2021, the credit could be as much as $33,000 per employee. Keep in mind that retroactive payment is available.

Which Wages Qualify?

There are different rules for which wages qualify, depending on the size of your business and the year you are looking at:

For 2020 (retroactive credit):

  • For companies with 100 or fewer employees, all wages paid to employees during a full or partial suspension of operations or period of significant gross receipts decline may qualify.
  • For larger companies, wages paid to employees while they are not performing services during a full or partial suspension of operations or period of significant gross receipts decline may qualify.

For 2021

  • For companies with 500 or fewer employees, all wages paid to employees during a full or partial suspension of operations or period of significant gross receipts decline may qualify.
  • For larger companies, wages paid to employees while they are not performing services during a full or partial suspension of operations or period of significant gross receipts decline may qualify.

For some employers, the ERC adds up to over a million dollars in credits. Contact an ERC specialist at LG Resources today to find out how much you could get back from this tax credit.

Let’s work together to make this a lucrative year!