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The Employee Retention Credit (ERC) is a tax credit for business owners that you shouldn’t overlook. It requires you to reduce your payroll income tax deductions, but a tax credit is better than a deduction, so it’s worth understanding.
Many business owners get a $5,000 credit for 2020 and a $21,000 credit per employee in 2021, for a total of $26,000.
Here’s how to qualify.
For employees in 2020:
- You must have had gross receipts that fell at least 50% compared to the same quarter in 2019.
- You had to partially or fully stop operations due to a government order.
For employees in 2021:
- You had to partially or fully stop operations due to a government order
- You must have had gross receipts that were 80% or less of the same quarter in 2019
However, remember that you can’t use wages for the ERC and PPP or any other assistance programs.
I know it’s confusing, but I’m here to ensure you get the credits you deserve. Contact me for more information.