A common question regarding the Employee Retention Credit (ERC) is where does the $26,000 number come from? How is that maximum value for ERC arrived at?
Lets break down the numbers:
For 2020, the maximum credit amount per employee is 50% of up to $10,000 in qualified wages paid between March 13, 2020 and December 31st, 2020. This means that businesses can claim up to $5,000 in tax credits per employee for the entire year 2020.
For 2021, the maximum credit amount per employee is 70% of up to $10,000 in qualified wages paid per quarter. This means that businesses can claim up to $7,000 in tax credits per employee per quarter for quarter 1, quarter 2 and quarter 3 of 2021. This means that businesses can claim up to $21,000 in tax credits per employee for the entire year of 2021.
A business can claim up to $26,000 ($5,000 + $21,000 = $26,000) in tax credits per employee for 2020 and 2021.
Maximizing this number is really what it all comes down to when filing for ERC. Ideally business owners would use a specialist when it comes to ERC, since some of the qualification requirements can be so complex.
Since ERC can only be filed for once, this makes it all the more important to go with a company who fully understands the ins and outs of ERC. Contact a representative from CLRA Group today to find out how your business may be able to maximize its ERC.