In order to qualify for the 2021 Employee Retention Credit your business must meet one of the following criteria:
• Have your operations been fully or partially suspended during a calendar quarter in 2020 due to an order from a governmental authority limiting commerce, travel, or group meetings due to COVID-19;
• Did your business experience a significant decline in gross receipts during a calendar quarter? For 2021 you must have experienced a 20% decline in any one 2021 quarter when compared to the same quarter in 2019.
If the answers to these questions are no then your business does not qualify for the 2021 Employee Retention Credit.
If my business does qualify what are the benefits?
You will qualify for a payroll tax credit based on a calculation using qualified wages paid from 1/1/2021 – 6/30/2021. The per employee qualified wage limit for the credit calculation is $10,000 per quarter (including certain health care costs) and the credit amount is 70% with a max of $7,000 per quarter (up to $14,000 through 6/31/2021). 500 FTEs (full time equivalencies) is the threshold for determining which wages count towards the credit. Employers with more than 500 FTEs may not be eligible. Also, there is no double dipping permitted if a business also received funds under Payroll Protection Program round 2 (PPP2). Only wages that were NOT covered by a forgiven PPP loan or another tax credit program are eligible.