The Employee Retention Credit (ERC) is really a new tax credit created in a reaction to the economic downturn caused by COVID-19. This tax credit aims to help businesses keep their staff on their payrolls of these difficult times. Here's the thing you need to understand about applying for the how to apply for employee retention credit 2022.
Qualifying Requirements
To be able to qualify for the employee retention credit, your business must meet certain criteria. First, your business must have had operations which were either fully or partially suspended because of government orders related to COVID-19. Alternatively, your company will need to have experienced a 50% decline in gross receipts when compared with exactly the same quarter of 2019. Furthermore, the ERC applies and then those businesses who employ fewer than 500 full-time employees.
Calculating Credits
The amount of credit available varies depending on what many employees you've and whether your company was fully or partially suspended as a result of government orders related to COVID-19. For businesses that were fully suspended, you can find no limitations on the total amount of money that can be claimed as a credit for every single employee; however, for businesses that have been only partially suspended due to government orders linked to COVID-19, there's an upper limit of $5,000 per employee per calendar quarter. Additionally, employers are eligible for credits up to a maximum of $7,000 per employee over all quarters in 2020 and 2021 combined. The sum total quantity of ERC credits allowed is limited by wages paid after March 12th and before January 1st of 2021.
Conclusion: Applying for the Employee Retention Credit is an excellent method for businesses affected by COVID-19 restrictions or closures to obtain some necessary financial relief while still to be able to retain their employees on their payrolls of these difficult times. However, it's essential for business owners and HR professionals alike to comprehend certain requirements and calculations necessary in order to apply for this tax credit successfully to allow them to maximize their savings. With this information at your fingertips, you will be well prepared when applying for the ERC!