© Marceliano Munoz
Articles
Employee Retention Tax Credit (ERTC) Changes
An important reminder for PPA Members that have W-2 employees.
This is a reminder that the federal government has updated the Employee Retention Tax Credit (ERTC) with three major changes:
- In 2020, you had to choose between a Payroll Protection Program (PPP) loan and an ERTC. In the new program rules, you can now receive both, retroactively for 2020 and going forward for the first six months of 2021. However, you cannot count any wages used for PPP forgiveness towards the ERTC; any wages after March 12, 2020 that you did not use towards PPP forgiveness are eligible for the credit.
- The eligibility requirements have been made easier for 2021. For a 2020 credit, you had to be partially or fully shut down by the government, OR experience a 50% reduction in gross revenues compared to the corresponding quarter in 2019. For a 2021 credit, you had to be partially or fully shut down by the government, OR experience a 20% reduction in gross revenues for the corresponding quarter in 2019.
- The amount of the credit has been increased for 2021. In 2020, you could/can receive a maximum credit of $5,000 for the year per employee; in 2021, you can receive up to $7,000 per employee per quarter, or $14,000 per employee for the first half of 2021.
W-2 Wages you paid to yourself or your spouse are eligible for the credit. Wages paid to other family members are not eligible.
The credit is available retroactively back to March 12, 2020.
If you think you may qualify for this credit, please talk with your tax preparer and/or your payroll processor as soon as possible. You can also reach out to PPA at [email protected] for additional information.