ERTC Eligibility & Benefits
- Eligibility Criteria
To be eligible for the ERTC, business owners must meet several eligibility requirements. A business or a tax-exempt organization is eligible if it suspended business operations fully or partially due to a government directive or order that affected its functions at any point during the COVID-19 pandemic.
Another requirement for eligibility is if the gross receipts decreased by 50% in a quarter compared to a similar quarter in 2019 for the 2020 tax credit. For the 2021 tax credit, the business must have gross receipts decline of 20% for a singular quarter compared to a similar quarter in 2019 to qualify. Government entities and sole proprietors don't qualify for Employee Retention Tax Credit.
- How to Apply for Employee Retention Tax Credit
Applicants can file for retroactive ERTC by filling out Form 944-X for the 2020 and 2021 tax years. However, it's prudent to consult a qualified tax lawyer such as Pietro Canestrelli to help ensure that all requirements are met. Note that for 2020, a business must have retained 100 or fewer employees and 500 or fewer employees for 2021 to claim the full credit.
- Benefits of Employee Retention Tax Credit
Pietro Canestrelli urges the need to educate eligible business owners and NGOs on the benefits of ERT. Here are some of the benefits:
- Incentivize Retention of Employees
The Employee Retention Tax Credit's primary purpose is to incentivize employee retention. The goal is to encourage businesses and organizations to continue employing and providing health insurance for employees; otherwise, they would have been laid off due to the COVID-19 pandemic and its aftermath.
- Help Small Businesses Survive the COVID-19 Pandemic
Small businesses play a critical role in the economy of any country, including the United States. Pietro Canestrelli says that recovery efforts would have been more difficult if small businesses were not there to provide goods and services to people in need.
- Encourage Employee Investments
Supporting business owners and their employees is essential for maintaining a healthy economy. The Employee Retention Tax Credit rewards business owners committed to keeping employees and helping them achieve professional goals.
- Promotes Collaborations Between Businesses and Employees
ERTC encourages a collaborative effort between business owners and employees. Investing in employees is not a one-way street; instead, it's a mutually beneficial relationship. It benefits the recruitment, retention, and professional development of talented employees.
- Provides Business Owners With Financial Relief and Optimism
When small businesses are stressed because of economic hardship and the risks of a pandemic, ERTC provides financial relief and optimism. Pietro Canestrelli emphasizes that without credit, business owners would have been forced to lay off employees, and many would have declared bankruptcy due to financial losses.
- Helps Small Businesses to Return to Normal Operations
The program helps small businesses get back on track and continue their operations. By providing financial assistance, many companies forced to suspend operations due to COVID-19 could come back online and serve their customers again.
Common questions about the ERTC Employee Retention Tax Credit
- Is it a scam? Too good to be true? False The ERTC is not a scam. Congress created this credit to assist small to medium business owners who kept their employees on during 2020 - 2021
- If my gross receipts were higher in 2020 and 2021 than previous years, I don't qualify for the ERTC? False. If you experienced a partial shutdown or were nominally affected in your business, you qualify for the ERTC.
- If I received the PPP loan forgiveness, I cannot receive ERTC? False. Depending on the amount you received, you might still qualify for ERTC.