There are some pervasive rumors about the Employee Retention Tax Credit that simply aren’t true, and it can lead to businesses leaving money on the table.
The Employee Retention Tax Credit (ERTC) is a huge help for many businesses that kept their workers employed over the course of the COVID-19 pandemic. However, many companies still have not taken advantage of it and are falling victim to some of the most common misconceptions about it. Here is the truth behind some of the most common myths about the Employee Retention Tax Credit.
You Can’t Claim the ERTC If You Have Claimed PPP or Received PPP Loan Forgiveness
This myth about the Employee Retention Tax Credit comes from the initial rules surrounding it. As a result of the Consolidated Appropriations Act (CAA) in 2021, there are no more restrictions on claiming PPP loan forgiveness or getting the ERTC. We can help you assess your wage spending to ensure that you are taking advantage of as many benefits as possible without breaking any rules.
You Can’t Get the ERTC If You Did Well During the Pandemic
Another myth about the Employee Retention Tax Credit is that your business needs to be severely suffering in order to qualify. In reality, there are two different ways that your business could be eligible. A government order that impeded business or a drop in your gross receipts could qualify you. For example, if there was a 50% decline in gross receipts in 2020 compared to 2019, you would qualify for that quarter. For 2021, the eligibility was only a 20% reduction in gross receipts.
You Will Automatically Receive $26,000 for Each Employee
One of the most harmful myths about the Employee Retention Tax Credit is that every employee who qualifies is worth a $26,000 credit. In reality, that is not the case. Instead, the maximum that you can receive per eligible employee is $26,000 total. In 2020, the maximum credit is $5,000 for every employee. For the three quarters that the ERTC was in effect in 2021, the maximum for every employee was $21,000 ($7,000 per quarter). As a result, the total maximum that could be received across two years was $26,000.
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Malden Solutions has a wealth of expertise in providing employer insurance solutions, HR solutions, and individual insurance solutions to businesses both big and small. Our team of seasoned professionals can help you navigate the rapidly-changing world of insurance with ease. We partner with businesses and individuals throughout the country to provide our dedicated services for employee benefits but also work within our surrounding communities in Maryland, Northern Virginia, and Washington, D.C. Contact us today to learn more about how we can provide effective, dynamic solutions for your business. Stay connected with us on Twitter, Facebook, and Linkedin.