Fortunately for those affected, there are certain tax credits available that can help offset some of the lost revenue and expenses incurred during this time. One such credit is the Employee Retention Credit, or ERTC. The ERTC
Calculator
helps businesses determine whether or not they are eligible for the ERTC credit and, if they are, calculate the total amount of money they can claim.
The ERTC credit was created to give employers an incentive to keep employees on board during the most difficult phase of the COVID-19 pandemic. It is designed to cover up to $10,000 in wages per employee, but there are a number of factors that need to be considered before claiming this credit. One of the biggest hurdles for most companies is understanding exactly what counts as qualified wages under this program. In order to qualify for the ERTC, a business must pay its employees at least 50 percent of their normal wages. This is determined by looking at the average number of full-time equivalent (FTE) employees over a specified period of time, which is usually measured in quarters.
This figure must be calculated in a manner that takes into account both the number of FTEs and the actual hours worked by those employees during that period. FTE employees are defined as anyone that works 30 or more hours per week or 130 or more hours per calendar month. This is different than the definition of an FTE in the Affordable Care Act, which is based on total number of hours worked. This means that the ERTC calculation is somewhat more complex, but also more accurate in terms of the number of qualifying FTEs.
As a result of the complexity, it is not uncommon for companies to get confused about how to properly claim their ERTC credit. A recent Bredin Snap Poll revealed that over half of the small business owners surveyed werenât familiar with the ERTC, and even more were unclear about how to calculate it.
A good place to start is determining how much you paid your employees during the first three quarters of 2021. This will allow you to estimate the total amount of qualifying wages that you paid your employees in those quarters.The maximum amount of ERTC that you can claim is $10,000 per employee, but itâs important to note that this cannot be combined with the Families First ERC Free Online Calculator Coronavirus Leave Act (FFCRA) tax credit.
In addition to calculating qualifying wages, youâll need to consider the impact of using PPP loan funds on your ERTC calculations. Itâs best to work with a trusted tax professional (like our team at Brotman Law) to ensure that you are accurately claiming your ERTC, and that youâre not leaving any money on the table
