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    Have you claimed your Employee Retention Tax Credit yet? There’s still time and you might be surprised at how much you could receive. 

    What is Employee Retention Tax Credit?
    The ERTC is an incentive originally created within the CARES Act intended to encourage employers to keep employees on their payrolls as they navigate the effects of COVID-19. There have been multiple modifications to the program through various legislative acts that have both extended and expanded the program through September 30, 2021.

    Are You Eligible?
    An eligible employer is an employer that actively carried on a trade or business during 2020 or 2021 and meets either of these two tests:

    Government Order Test: Experienced a calendar quarter “in which the operation of the trade or business is fully or partially suspended due to an order from an appropriate government authority limiting commerce, travel or group meetings (for commercial, social, religious or other purposes) due to COVID-19.”

    Reduced Gross Receipts Test: Experienced a significant decline in gross receipts. For 2021, a decline in gross receipts of at least 20 percent in any calendar quarter through September 30, 2021, compared to the same calendar quarter in 2019.
    Alternative method for 2021 allows for the use of gross receipts of the immediate prior quarter compared to the same quarter in 2019 to determine a decline of greater than 20 percent.

    For 2020 (beginning after March 12, 2020), a significant decline in gross receipts is measured at 50 percent versus 20 percent in 2021.

    How Is It Calculated?
    The credit is calculated on eligible wages up to $10,000 at a credit rate of 50 percent (for 2020) and 70 percent (for 2021). The credit was also expanded for 2021 in that the maximum wages of $10,000 were expanded to a per-quarter cap. This increased the potential credit from $5,000 per employee for 2020 to $21,000 per employee for 2021. Eligible wages used to determine the ERTC shall not be used for purposes of other tax credits and PPP loan forgiveness. There are a lot of nuances to this credit, and even though the credit period expired on September 30, there is still time to amend your 941 payroll returns and claim the credit for past reporting periods. We can help you navigate the calculation of eligibility and the process of claiming the credit.

    Cristy Andrews is a Warren Averett Tax Member and is one of the Firm’s ERTC leaders. She has helped numerous companies claim their ERTC. Andrews provides industry-specific tax strategies for clients to meet their unique needs. Reach her at 334-260-2339 or Cristy.Andrews@warrenaverett.com.
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