Maximizing the Employee Retention Tax Credit (ERTC) claims and tax credits can be a challenging task for many business owners, particularly with the constantly changing regulations and guidelines surrounding the ERTC. However, with the right tools and resources, claiming the ERTC can be a straightforward and efficient process. In this article, we will explain ERTC, how it works, and how you can use our easy-to-use calculator to compliantly maximize your ERTC claims and tax credits.

What is ERTC?

The ERTC is a federal tax credit that was introduced under the CARES Act in March 2020 to help businesses retain W2 employees on payroll during the COVID-19 pandemic. The credit provides a refundable tax credit equal to 50% of qualified 2020 wages, up to a maximum credit of $5,000 per employee in 2020, and 70% of qualified 2021 wages, up to a maximum credit of $7,000 per employee, per 2021 quarter. The credit may cover wages paid between March 13, 2020, and September 30, 2021, though for businesses established on or after February 15, 2020, may also include wages paid in Q4 2021.

Who is eligible for the ERTC?

To be eligible for the ERTC, an employer must meet one of the following requirements: • The business was fully or partially suspended due to a government order related to COVID-19, or • The business experienced a significant decline in gross receipts defined as more than 50% less in any quarter in 2020 than the same quarter in 2019 or as more than 20% less in any quarter 2021 compared to the same quarter in 2019.

How does the ERTC work?

The ERTC is meant to incentivize employers that retained employees on payroll during the pandemic. Eligible employers can claim the ERTC for qualified wages paid to employees. Qualified wages are wages paid to an employee between March 13, 2020, and September 30, 2021, through for employers that were established on or after February 15, 2020, qualified wages may extend through December 31, 2021. To qualify, wages must meet one of the following criteria:

• The wages were paid while the business was fully or partially suspended due to a government order related to COVID-19, or
• The wages were paid during a calendar quarter in which the business experienced a significant decline in gross receipts defined as more than 50% less in any quarter in 2020 than the same quarter in 2019 or as more than 20% less in any quarter 2021 compared to the same quarter in 2019.

The maximum credit amount is equal to 50% of qualified 2020 wages, up to a maximum 2020 credit of $5,000 per employee, and 70% of qualified 2021 wages, up to a maximum credit of $7,000 per employee, per 2021 quarter.

How Can You Compliantly Maximize Your ERTC Claim and Tax Credits?

Claiming the ERTC can be a complicated process, and it's critical to have accurate and up-to-date information to ensure that you receive the maximum amount of credit available to you. Our easy-to-use calculator is designed to help you determine your eligibility for the ERTC and claim amount. To use our calculator, simply enter the relevant information, such as the number of employees, gross receipts, and qualified wages, and the calculator will provide you with a detailed breakdown of your eligibility and the maximum credit amount you can claim.

In addition to using our calculator, there are several other ways you can compliantly maximize your ERTC claim and tax credits:

• Keep accurate records: To claim the ERTC, you must keep accurate records of qualified wages paid to employees and the amount of credit claimed.
• Stay up-to-date with the latest guidelines: The guidelines and regulations surrounding the ERTC are subject to change, and it's essential to stay informed with the latest information to ensure that you are claiming the correct amount of credit.
• Consult a tax professional: If you are unsure about your eligibility for the ERTC or how to claim the credit, it's always a good idea to consult with a tax professional who can who can provide you with accurate and up-to-date information.

Conclusion

ERTC provides a much-needed source of financial relief for businesses that retained their employees during the COVID-19 pandemic. To make the most of this credit, businesses must meet the eligibility criteria and correctly file the necessary paperwork.

At SmartERTC, we are dedicated to guiding our clients through the complex world of tax credits and incentives. If you have any questions regarding ERTC or any other tax credit, don't hesitate to reach out to us. We are here to help.