September 24, 2021
JPS reported on updated 2021 ERC eligibility and threshold changes earlier this year and would like to remind employers of these changes. Even if you didn’t qualify for the 2020 credits, you may be eligible for the modified 2021 credits, which are currently set to expire on December 31, 2021.
In March 2021, the IRS issued guidance pertaining to the Employee Retention Credit (ERC), a business relief provision created by the CARES Act in March 2020 and subsequently altered in the Consolidated Appropriations Act (CAA) in December 2020. The CAA alterations expanded this refundable payroll tax credit, which was designed to help COVID-effected employers keep employees on their payroll.
Highlights of 2021 ERC changes are listed in this article.
(Please refer to JPS article published on March 3, 2021, for further details.)
2021 Eligibility for Qualifying Employers:
Qualifying employers for 2021 ERC must meet one of these two requirements:
- Partially or fully suspended operations from January 1, 2021, through June 30, 2021, due to a government order related to COVID-19
or - Gross receipts declined more than 20% in any 2021 quarter compared to the same in 2019.
Employers receiving PPP loans are considered eligible for 2021 ERC, but the same payroll costs can’t be used for both programs.
Those not in business in 2019 may use corresponding quarters from 2020 as a reference point for the gross receipts comparison.
2021 ERC Rates:
Eligible employers can receive 2021 ERC credits for each employee, whether full or part-time:
- The credit increased from 50% to 70% of qualified wages.
- Increased wage limit from $10,000 per year per employee to $10,000 per quarter
Employer size restrictions were also relaxed significantly for the 2021 credit.
To learn more about ERC, click here.
To read other JPS COVID-related articles, click here.