Federal Employee Retention Credit is Available for Established and New US-Based Businesses

Employee Retention Credit

Written by the team at Rooney Law

Back in February 2021, during the height of the COVID pandemic, we wrote an article about the Five Important Things You Should Know About the US Employee Retention Credit (ERC). As a reminder, the ERC is a payroll tax credit born out of the same COVID relief bill as the Paycheck Protection Program (PPP). Did you know that your business can claim ERC even if you received PPP funds?

Here are the details:

New businesses may be eligible for up to $100,000 in cash back from the IRS (net of any payroll tax credit offset). There are a few components that must be met to apply for the tax credit. These include:

  • Your business was formed after Feb 15, 2020
  • The business has $1 million or less in annual revenue
  • There is at least one employee at the company that is not related to you

Established businesses may be eligible for up to $500,000 in an IRS credit in 2020 or $2.1 million credit in 2021 (or more). This assumes a company has 100 employees (business eligibility is limited for businesses with more than 500 employees in 2019).

The amount of credit is based on the Employee Retention Credit of 50% of all eligible wages up to $10,000 per employee in 2020 and 70% of wages up to $10,000 for each quarter in 2021.

You may be eligible for the credit if your business:

  • Was impacted due to a governmental authority limited commerce, travel, or group meetings due to COVID-19; or
  • Experienced a significant decline in gross receipts.

If you have any questions or need help, please email Allan RooneyTim DavisElannie Damianos, or call +1 212 545 8022.

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