The Employee Retention Tax Credit (ERTC) program is a valuable resource for eligible employers looking to retain their workforce during challenging economic conditions, such as the COVID-19 pandemic. This blog will outline the steps involved in claiming the ERTC, including eligibility criteria, calculation methods, and application procedures.
Eligibility Criteria for the ERTC Program
To claim the ERTC, employers must meet specific eligibility criteria, including:
-
- Experiencing a significant decline in gross receipts during a calendar quarter.
- Having operations partially or fully suspended by a governmental order related to COVID-19.
- Retaining their employees during the period for which they are claiming the credit.
Calculation Methods for the ERTC Program
The amount of the ERTC depends on several factors, including the number of employees retained and the amount of qualified wages paid to those employees. To calculate the credit, eligible employers should determine the qualified wages paid to each employee during the period for which they are claiming the credit. The credit amount is 70% of the qualified wages paid, up to a maximum of $10,000 per employee per quarter.
Application Procedures for the ERTC Program
To claim the ERTC, eligible employers should report their qualified wages and the related credit for each quarter on their federal employment tax returns, such as Form 941. Alternatively, eligible employers can request an advance payment of the credit by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.
Conclusion
The Employee Retention Tax Credit (ERTC) program provides a valuable resource for eligible employers looking to retain their workforce during challenging economic conditions. To claim the ERTC, employers must meet specific eligibility criteria, calculate the credit amount based on qualified wages paid to retained employees, and report their qualified wages and related credit on their federal employment tax returns. Alternatively, eligible employers can request an advance payment of the credit by filing Form 7200.