Orlando, Fla.—The Employee Retention Credit (ERTC) is a refundable credit that businesses can claim on qualified wages, including certain health insurance costs, paid to employees.
The following are some impacts that may qualify your business for the Employee Retention Credit:
- Full shutdowns
- Partial shutdowns
- Interrupted operations
- Supply chain interruptions
- Inability to access equipment
- Limited capacity to operate
- Inability to work with your vendors
- Reduction in services or goods offered to your customers
- Cut down in your hours of operation
- Shifting hours to increase sanitation of your facility
As a result of new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021. The ERC was extended and expanded in March to go through Dec. 31, 2021, as part of the American Rescue Plan Act of 2021 (ARPA). Originally, the ERC was enacted in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
Wages/compensation subject to FICA taxes, as well as qualified health expenses qualify when calculating the employee retention credit. These must have been paid after March 12, 2020 and qualify for the credit if paid through Dec. 31, 2021. For the purposes of the employee retention credit, a full-time employee is defined as one that in any calendar month in 2019 worked at least 30 hours per week or 130 hours in a month (this is the monthly equivalent of 30 hours per week) and the definition based on the employer shared responsibility provision in the ACA. Those who have more than 100 full-time employees can only use the qualified wages of employees not providing services because of suspension or decline in business.
Employers with 100 or fewer full-time employees can use all employee wages — those working, as well as any time paid not being at work with the exception of paid leave provided under the Families First Coronavirus Response Act. The Consolidated Appropriations Act of 2021 increased its limit to businesses with up to 500 employees.
The ERC has gone through significant updates, so even if you and your advisor have reviewed it before, we encourage you to take another look with a specialist to uncover all qualifying activities and wages that will maximize your benefit and/or refund before it ends.
At Garzor Insurance we care about your business. Our experienced professionals are dedicated to providing commercial insurance, including business general liability coverage in Florida as well as Georgia, Texas, and now many other states across the U.S.A. If you have questions about business insurance, or any other commercial insurance aspects, please do not hesitate to visit us online at Garzor Insurance, or you may want to call us directly at (321) 206-8035.
Yaralyn Diaz, CSR
Commercial Lines CSR