Employee retention credit 

The Employee Retention Tax Credit (“ERC”) is an economic recovery program created by the CARES Act – the same legislation that created the Paycheck Protection Program (PPP).

Has your business been affected by COVID?

Receive up to $26,000 per employee in cash refunds for 2020 & 2021

Mofrad Financial specializes in working with Businesses in Los Angeles to get Employee Retention Tax Credit (ERTC) funds. We’ll provide you with a consultation to help you find out if you qualify. If you do, we can help with the paperwork to get the maximum credit possible.
 

The Employee Retention Tax Credit (ERTC) was created to incentivize and provide a credit to employers that retained their employees on payroll even if they are not working during a covered period due to COVID-19. The Employee Retention Tax Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees. For 2020, the credit is 50% of up to a maximum of $10,000 in qualified wages and costs for employee health insurance (including dental) for each full-time employee beginning March 13 and ending Dec. 31, 2020. Therefore, the maximum tax credit you can receive per employee is $5,000. For 2021, the credit is up to 70% of up to $10,000 in qualified wages and employee health insurance (including dental) costs per full-time employee for each calendar quarter beginning Jan. 1 and ending Dec. 31. Therefore, the maximum amount you can receive is
$7,000 per quarter per employee.

 

Many business owners have failed to claim their tax credits due to confusion over deadlines and eligibility. It’s not too late to receive your payout for Employee Retention Tax Credits (ERTC)!
 

FAQ

What is the Employee retention credit? 

The Employee Retention Tax Credit (ERTC) is a credit that provides tax relief for companies that lost revenue in 2020 and 2021 due to COVID-19.  It rewards businesses who kept employees during the COVID-19 pandemic, up to $26,000 per employee. 

who is eligble?

To qualify for the credit, your business or nonprofit organization must meet at least one of the following requirements in the calendar quarter they want to use the credit: 

  1. The business was fully or partially closed due to a government order stemming from the COVID-19 pandemic, or

  2. The business had a decline in gross receipts

What counts as a partial suspension of business operations?

To qualify as partially suspended, an employer's business operations must have been limited due to a federal, state, or local order, proclamation, or decree that affected the employer's operations.

An example of a partially suspended business would be a restaurant that could no longer welcome dine-in customers but continued to provide carry-out or delivery services

How Is The Employee Retention Credit Determined?

For wages paid in 2020, the tax credit is worth 50% of qualified employee wages. The highest amount that would be considered qualified employee wages for any one employee is $10,000 for the entire year. Following that math, the maximum credit a business can get per qualified employee is $5,000 (i.e., 50% of $10,000). 

 

For wages paid in 2021, the tax credit is higher: 70% of qualified employee wages. The highest amount of qualified wages paid that would be considered for any one employee is also larger: $10,000 per month. Therefore, the maximum credit a business can receive for 2021 is considerably larger than for 2020.

What are Qualified Wages?

Qualified wages are compensation provided to employees during an eligible period.  An eligible period is either:
 

a) the time during which the trade or business is fully or partially suspended by governmental
order, or

 

b) for 2020, any calendar quarter during which gross receipts are 50% less than the amount received during the same quarter of 2019; for 2021, any calendar quarter during which gross receipts are 20% less than the same quarter of 2019.

When does the Employee Retention Tax Credit Expire?

While the period covered by the ERTC is over, it is not too late to retroactively receive your tax credit. You have three years after your initial tax filing to fill out Form 941-X. So, for those trying to claim their 2020 ERTC, which they likely would have filed in early 2021 as part of their 2020 taxes, they have until the same date in 2024.