WHAT IS THE ERC?
The Employee Retention Credit
Doral Tax & Accounting is a public accounting firm that specializes in processing ERC for small & medium-size businesses. We are in the heart of Doral, FL and cater businesses all across the U.S.
The ERC Explained
All the information you need to know about processing Employee Retention Credits.
Private-sector employers and tax-exempt organizations may qualify for a refundable tax credit under the CARES Act Employee Retention Credit (ERC). This credit applies to qualified wages paid by employers to employees during the COVID-19 crisis. The credit is applicable to qualified wages paid from March 12, 2020, through December 31, 2021.
In 2021, the credit equals 70% of the CARES ERC earnings entered, up to $10,000 in wages per employee per quarter.
In 2020, the credit was 50% of the CARES ERC earnings entered, up to $10,000 in wages per employee paid between 3/13/2020 – 12/31/2020.
Starting from July 1, 2021, new businesses that began after February 15, 2020 and have an average annual receipt of less than $1,000,000 may also qualify for the credit, up to $50,000 per quarter.
The credit will be applied to the payroll’s Federal tax liability (excluding FUTA). If the credit exceeds the payroll’s Federal tax liability, the remainder of the credit will be used for future payrolls’ Federal tax liability.
If the clients don’t use the entire credit by the end of the quarter, the remaining credit will be reported as an overpayment on their quarterly tax return. The IRS will refund the overpayment when the quarterly return is processed.
Unlock the benefits of the Employee Retention Credit in 2021 in two easy steps.
Step 1
VERIFY IF YOU ARE AN ELIGIBLE EMPLOYER
To qualify for the ERC, the business must have fully or partially suspended its operation during any quarter due to orders from an appropriate government authority, limiting commerce, travel, or group meetings due to COVID-19. Additionally, a new business that started after February 15, 2020, and has average annual receipts of less than $1,000,000, may qualify for the credit, up to $50,000 per quarter, effective July 1, 2021.
Employers may also qualify for the ERC by experiencing a significant decline in gross receipts during the applicable quarter. For 2021, a significant decline is defined as a drop of at least 20 percent in gross receipts compared to the same calendar quarter in 2019. For 2020, the decline must be at least 50 percent. Severely Financially Distressed Employers, defined as those with gross receipts less than 10 percent of the corresponding base period in 2019, may apply the credit to all wages paid to employees, even if they have over 500 employees, up to the $10,000 per employee per quarter limit.
Step 2
PROCESSING YOUR
PAYROLL
This process will record qualified CARES Employee Retention Credit wages and, if applicable, qualified healthcare expenses.