Helping your business get up to $26K per employee with the ERC.

Was your business impacted by COVID? Contact us to discover if your business may be eligible for ERC.

At EIAG, we have a team of experts in place to help you secure your ERC claim and receive your rightful compensation with confidence, security, and peace of mind.

ERC - Employee Retention Credit A Definitive Guide [2023]

  • The Employee Retention Credit (ERC) is a refundable payroll tax credit that was created under the CARES Act to incentivize businesses to keep employees on payroll during the pandemic. Businesses could claim up to $26,000 per W-2 employee. The funds were intended to help businesses keep operations afloat and/or thrive amid the economic fallout caused by the pandemic, such as shutdowns, capacity limits, sanitation measures, supplier disruptions, and stay-at-home orders.

    Today, there are millions of unclaimed dollars available, and companies impacted by the pandemic may be eligible to claim their credit. Businesses do not have to be struggling at this very moment to qualify.

    Read the IRS news release.

  • The ERC has different qualification requirements, but the most basic requirement is that the employer must have been carrying on a trade or business during the respective ERC calendar quarter. If you were self-employed during the eligibility period, you do not qualify for ERC refunds for your own wages, but you may be able to claim the credit for wages paid to other people who worked for you.

    It is important to note that the ERC has been amended three separate times since it was originally enacted as part of the CARES Act. If your business was ineligible when the plan was introduced, EIAG encourages you to review your business's facts and circumstances. Many businesses that did not originally qualify can now file for retroactive ERC reimbursement.

    For example, in Spring 2020, businesses had to choose between receiving a PPP loan or applying for the ERC. This restriction no longer exists, so a business that received one or two PPP loans can still be eligible for ERC in 2020 and/or 2021.

  • The ERC refund amount varies for each year. To qualify, employers must meet certain requirements, which have changed several times since the program began. It's important to read the latest requirements and stay current on changes, as many are retroactive.

  • Businesses have three years to retroactively claim the Employee Retention Credit (ERC) on taxes paid during the pandemic. There are two deadlines to submit your ERC claim:

    ● For all quarters of 2020, the ERC deadline is April 15, 2024,
    ● For all quarters of 2021, the ERC deadline is April 15, 2025.

    The April 15 tax deadline applies to the previous year’s taxes (i.e. the deadline for tax year 2022 falls on April 15 of 2023).

    The U.S. Congress can also choose to end the ERC at any time. That’s why it’s critical to file your amended payroll tax return claiming the ERC as soon as possible.

  • If you are looking for the Employee Retention Tax Credit (ERC/ERTC) application, you will not find it because there is no application. Instead, there are specific IRS forms that must be used to claim the credit.

    The following forms are required to claim the ERC/ERTC:

    ● Employer’s Quarterly Federal Tax Return Amendment, Form 941-X,
    ● Employer’s Quarterly Federal Tax Return Amendment worksheets,
    ● Reporting Agent Authorization, Form 8655,
    ● PPP 3508 forgiveness application, when applicable.

    In addition to the required forms, there are also rules and regulations, calculations, and changes to be aware of when claiming the ERC/ERTC.

    For example, businesses that received a Paycheck Protection Program (PPP) loan were initially ineligible for the ERC/ERTC. However, this rule was changed in the American Rescue Plan Act of 2021. Now, businesses that received a PPP loan may be eligible for the ERC/ERTC, but only if they meet certain requirements.

    The ERC/ERTC is a refundable tax credit, which means that it can be used to offset your tax liability or refunded to you if your tax liability is zero. The amount of the credit depends on a number of factors, including the number of employees you have, your qualified wages, and your decline in gross receipts.

    To Claim the ERC/ERTC, a qualified employer will need to file an amendment payroll tax return using Form 941-X. The deadline to file for the 2020 ERC/ERTC is April 15, 2024, and the deadline to file for the 2021 ERC/ERTC is April 15, 2025.

  • The U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that included a special government tax credit called the Employee Retention Credit (ERC). The ERC has been amended three separate times after it was originally enacted as part of the CARES Act in March of 2020 by the Taxpayer Certainty and Disaster Relief Act of 2020 (Relief Act), the American Rescue Plan (ARPA) Act of 2021, and the Infrastructure Investment and Jobs Act (IIJA). These amendments include changes to eligibility for businesses receiving one or more Paycheck Protection Program (PPP) loans.

    Among several other enhancements, the Relief Act increased the credit available to 70% for wages paid during eligible 2021 calendar quarters. This includes employer paid health insurance costs. The credit covers a maximum of $10,000 in qualified wages paid per quarter per employee.

    Title VI—Other Provisions, § 80604 of the Infrastructure Investment and Jobs Act affects the termination of ERC for employers experiencing closure due to Covid-19. Part of these changes included moving the deadline from January 1, 2022, to October 1, 2021.

    The only exception to the deadline change as a result of the IIJA is for Startup Recovery businesses. Those businesses remain at the original January 1, 2022 deadline. Gross receipts reduction and business closures were also removed from the qualifications of recovery startups.

    By removing the 4th quarter of 2021, most businesses suffer a severe impact. This includes reducing the maximum amount of credit those businesses receive from $28,000 to $21,000.

  • The ERC is not limited to specific industries. Businesses should review their specific facts and circumstances to determine a reasonable basis for claiming the ERC credit. EIAG provides an initial analysis of your business structure and operations, first, and then moves forward accordingly.

    EIAG is a firm that helps businesses claim the ERC. They provide an initial analysis of your business structure and operations to determine if you qualify for the credit. They then help you file the necessary paperwork to claim the credit.

    The ERC is a valuable tool for businesses that have been affected by the COVID-19 pandemic. The credit can help businesses keep employees on the payroll and avoid layoffs. Here is just an example of some industries benefiting from ERC.

Am I eligible?

You may be if you were impacted by any of the following:

Covid-related Restrictions

Reduction in
Revenue

Supply Chain
Disruptors

Four-Step Process

Review facts and circumstances to determine eligibility for the ERC.

Eligibility

Calculation

We calculate the ERC based on your facts and circumstances.

File your claim

Verifies that all programs can work together to maximize credit.

Receive your money

Verify all forms are completed before ERC deadlines.

Analysis of ERC Enhancements (Comparison Chart)

Compare 2020 ERC 2021 ERC
Applicable dates 3/13/2020-12/31/2020 1/1/2021-9/30/2021 (7/1/2021-12/31/2021 for Recovery Startup businesses)
Credit percentage applied to qualified wage 50%  70%
Eligible if government instrumentality?
No		 Yes, if qualifications are met
Eligible if obtaining PPP loan? Yes Yes
Maximum credit per employee  $5,000 per 2020
$7,000 per employee per quarter
Maximum number of average full-time employees allowed to claim credit on all wages paid (based on average full-time 2019 headcount). Large employers are still eligible but with different value 100 or fewer 500 or fewer
Partially or fully suspended business operations Yes (or decline in gross receipts) Yes (or other eligibility)
Per-employee "qualified" wage limit $10,000 per 2020 $10,000 per quarter
Recovery start up business (business start after 2/15/2020) No Yes for quarter 3 and/or quarter 4 only
Significant decline in gross receipts threshold 50% until the quarter following the quarter that reaches above 80% of the corresponding quarter’s gross receipts 20% and includes alternative quarter election options

EIAG’s Areas of Specialization

Non-profits

Due to EIAG’s expertise and knowledge of the ERC, our team has successfully reviewed factors that determine a reasonable basis for a number of nonprofits to claim the ERC.

Multifamily/Apartment Owners

A Federal Eviction Moratorium impacted all apartment owners across the country, giving businesses in this industry a reasonable basis for claiming the ERC.

Independent Schools

EIAG has submitted applications on behalf of dozens of schools and learning institutions to help them qualify for the ERC.

Manufacturing

Many manufacturing companies had a temporary shutdown of operations, giving businesses in this industry a reasonable basis for claiming the ERC.

Important Update about the ERC Program

EIAG has closely monitored information regarding the moratorium the IRS implemented on the Employee Retention Credit (ERC) on September 14th, 2023.

We have learned there is currently a bill in Congress that, if passed, would result in the barring of any additional ERC claims from being submitted after 1/31/24. (see reference here)

The ERC: Employee Retention Credit in 2023 for Non-Profits:

Meet Liz Pierson, ERC Nonprofit coordinator at EIAG. In this video, Liz talks about ERC for nonprofits and why it's worth looking into.

Frequently Asked Questions

  • The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)’s Employee Retention Credit (ERC) is a fully refundable tax credit.

    Based on the guidance from the IRS for 2020, the ERC is equal to 50% of qualified wages (including allocable qualified health plan expenses) that eligible employers paid their employees during ERC-specific tax periods. The 2020 guidance applies to wages paid after 3/12/2020 and before 1/1/2021. The maximum amount of wages taken into account for each employee for all calendar quarters in 2020 is $10,000, so the maximum credit for an employee is $5,000.

    Based on the guidance from the IRS for 2021, the ERC credit is increased to 70%. The limit is $10,000 per employee per quarter and is only available for the first, second & third quarters of 2021.

    Recovery Startup businesses that began operation after February 15, 2020, may apply for a maximum ERC of $50,000 for each tax period July 1, 2021, through September 30, 2021, and October 1, 2021, through December 31, 2021.

    The tax credit offsets the employer’s portion of Social Security Tax or Medicare Tax (depending on the eligible tax period an employer claims). The IRS will refund any excess credit. W2s do not have to be corrected because the tax credit only applies to the employer’s portion of the employment taxes.

  • The Employee Retention Credit (ERC) is a government program that helps businesses keep their employees on the payroll during the COVID-19 pandemic. It is one of several benefits provided under the CARES Act and the Families First Coronavirus Response Act (FFCRA).

  • There are different levels of qualification for the ERC. As the most basic ERC qualification, the IRS indicates to be an eligible employer, an employer must have been carrying on a trade or business during the respective ERC calendar quarter. If you were self-employed during the eligibility period, you do not qualify for ERC refunds for your wages. However, if you had other people working for you, you may be able to take the credit. Certain tax-exempt organizations and government instruments were also identified as meeting basic ERC qualifications.

    Suppose your business was ineligible when the plan was introduced. In that case, EIAG urges you to review your business’s facts and circumstances. It is critical to note that the ERC has been amended three separate times after it was originally enacted as part of the CARES Act. Many businesses that did not initially qualify can file for retroactive ERC reimbursement.

    Please also see FAQ #8 - Which businesses are eligible?

  • Eligible employers can claim the Employee Retention Credit (ERC) for payroll taxes paid during the COVID-19 pandemic for up to three years. The deadline to file an amended payroll tax return (Form 941-X) for 2020 is April 15, 2024, and the deadline to file an amended payroll tax return for 2021 is April 15, 2025. However, the U.S. Congress can choose to end the ERC at any time, so it is important to file your amended payroll tax return as soon as possible.

  • Payroll providers and CPAs have specific functions, and analyzing and preparing the ERC may not be one of those functions or one of their strengths. Incentives specialists work with incentives daily and have the insight to help an employer coordinate material from their agents while also gathering other qualitative and quantitative data specific to client operations.

    The ERC has various elements such as Controlled Group criteria, documenting qualification methodology, coordination with PPP loans, observing other credits, allocating healthcare expenses to qualified wages, etc. All these ERC elements are not typically built into automated payroll processes used by payroll providers.

    The complexities of the ERC are such that incentives specialists can be sure to focus on each element that applies to an employer and address them accordingly for the maximum return.

  • The Employee Retention Credit (ERC) is no longer available as a direct payment. To claim the ERC, eligible employers must now file an amended Form 941X (Quarterly Federal Payroll Tax Return) for the quarters during which they were eligible employers.

  • For 2020, the ERC equals 50% of the “qualified wages” paid to an employee, up to $10,000 per employee, capped at $5,000 annually.

    For 2021, the ERC equals 70% of the first $10,000 in “qualified wages” per employee in each eligible calendar quarter of 2021.