Back to the top

News and Blog Posts

Employee Retention Tax Credit Gets a Boost

The second relief bill, passed at the end of 2020, contains updates to the employee retention credit, a refundable payroll tax credit. Each option has its own rules and regulations for first- and second-round funding. The act changes some requirements for the ERC — retroactively and prospectively — giving businesses more options to claim it.

Eligibility Updates

Not every business qualifies for this credit. To be eligible, it must meet either of these criteria:

  • The business was fully or partially suspended due to orders from the federal or state government limiting commerce, travel or group meetings due to COVID-19.
  • The business experienced a 50% year-over-year decline in gross receipts during any quarter of 2020 or a 20% decline in the first two quarters of 2021 compared with the same period in 2019.

In addition:

  • Certain governmental employers (e.g., state colleges, universities, hospitals) are now eligible for this credit.
  • Certain businesses that were started in response to the pandemic may be able to claim the credit.

Small or Large Business?

If your business is eligible, the next step is determining whether you qualify as a small or a large business. The definitions of business size changed under the act. For 2020, businesses with 100 or fewer employees were considered small businesses, but the act changed that. For 2021, businesses with up to 500 employees are classified as small businesses.

Dollar Limits

For eligible small businesses, wages paid in 2020 are eligible for a 50% credit. That changes to 70% in 2021. For eligible large businesses, only wages paid to employees who were furloughed or not working qualify for the credit. Otherwise, the limits are the same: 50% for wages paid in 2020 and 70% for wages paid in 2021.

Wages paid to some employees who work at a level below their normal qualifications may also qualify.

The maximum credit is $5,000 for tax year 2020 and $7,000 per quarter for each of the first two quarters of 2021.

Other Major Changes to the ERC

  • Businesses can take the ERC even if they borrowed PPP funds. This change is retroactive for wages paid after March 12, 2020. There is a caveat: Businesses may not take a double deduction. That is, they may not use the same wages for the ERC as they do for PPP loan forgiveness.
  • The ERC was extended through June 30, 2021.
  • Businesses may use the immediately preceding quarter to determine eligibility.

This is just a summary of some complex provisions that may affect how a business works with other relief programs. Our team at Greenlink can make sure you're making the best use of any programs for your business. Give us a call at 480-385-2525 to ensure your business isn't leaving any money on the table.

Copyright © 2021

Check out more articles →

News and Blog Posts

Heading

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Check out more articles →