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On behalf of our local officials, businesses, and communities and valued members, The Chamber and the Greater Fargo-Moorhead Economic Development Corporation are working together to provide the most crucial and beneficial information for you. Here you will find important guides, links, executive orders, details on Small Business Administration relief loans and much more, as we continue to navigate the COVID-19 crisis.
This page is meant to help you navigate resources to keep you safe and informed. As the situation develops, we will monitor and update this page.
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2021: $28,000 tax credit per employee
Employee Retention Credit: $7K quarterly wage subsidy per employee for 2021
Information provided by Eide Bailly, LLPThe COVID recession isn’t over for everyone. For businesses still struggling to return to 2019 revenue levels, the tax law has a lifeline: a refundable tax credit of up to $7,000 per-employee, per-quarter.
It’s easy to see how $7,000 per quarter, per employee, can add up. For a qualifying company with 50 employees, for example, it could mean as much as $1,400,000 in benefits for 2021.
The Employee Retention Credit (“ERC”) was first enacted as a tax credit of up to $5,000 per employee for 2020. The 2020 credit applies to taxpayers who had a 50% decline in revenue for a 2020 quarter compared to the same 2019 quarter. As a result of new legislation, the 2021 credit only requires a 20% drop in revenue when compared to the comparable 2019 quarter. The 2021 credit was also significantly increased to $7,000 per employee per quarter.
Businesses that do not meet the revenue decline test but experienced a shutdown or partial suspension of operations by government order due to COVID may also qualify.
The ERC is claimed on quarterly payroll tax returns. Because it is refundable, the IRS will issue employers a check if the credit exceeds the amount of payroll taxes the employer paid.
Other key enhancements provided for in updated legislation include:
- Employers who received Paycheck Protection Program (PPP) loans may now qualify
- For employers with over 100 full-time employees, the 2020 credit is limited to wages paid to employees not providing services. For 2021, that limitation is increased to employers with more than 500 full-time employees.
- Some governmental agencies qualify for 2021.
- Startup Businesses which opened after February 15, 2020 and have average gross receipts under $1 million can qualify for the credit without meeting the drop in gross receipts test.
- Employers can use prior quarter gross receipts for measuring qualification for the subsequent 2021 quarter.
To learn more, contact Patrick Kautzman, Eide Bailly Tax Partner, at PKautzman@eidebailly.com