How Do You Calculate the Employee Retention Credit? 

 December 10, 2023

By  Jace W Campbell, CPA

Calculate the Employee Retention Credit

The Employee Retention Tax Credit (ERTC) is a refundable tax credit designed to incentivize employers to keep their employees on payroll… It’s part of a larger relief package aimed at mitigating the economic effects of COVID-19. Employers who qualify can claim this credit on their federal employment tax return… But remember, it’s not as simple as it sounds. The eligibility criteria and calculation method are both complex aspects that require thorough understanding…

Now you might be wondering, how does one qualify for the ERTC? Let’s explore this topic in depth…

How Confident Are You In Your ERTC Eligibility?

Watch Our Video Explaining the Fraud We’ve Seen From National ERC Promoters

Qualifying for the ERTC: Delving Deeper

As mentioned earlier, the IRS has set specific criteria that businesses must meet to be eligible for the Employee Retention Tax Credit (ERTC)… The main requirements revolve around a significant decline in gross receipts or a full or partial suspension of operations due to government orders related to COVID-19…

However, there’s more nuance to these criteria… and one crucial aspect is understanding the qualifying period for the ERTC. The qualifying period refers to exact dates during which a business meets either of the two qualifying criteria…

If your business qualifies because of a significant decline in gross receipts, then all wages plus health insurance premiums paid for that entire quarter will be considered in your credit calculation… This includes every single day of that quarter – whether you experienced a decline on those days or not…

On the other hand, if your qualification is due to a full or partial suspension of operations following governmental orders, then only those dates when your operations were actually affected qualify… In simple words, your qualified period consists only of those days when you were more than nominally impacted by such orders. Any time when these conditions do not apply, you are outside the qualified period…

Now, there’s another common question among business owners: Can you claim ERTC if you received PPP?

The Paycheck Protection Program (PPP) is another relief effort aimed at helping small businesses keep their workforce employed during this pandemic… But does receiving PPP funds affect your eligibility for ERTC? According to IRS guidelines, employers who receive PPP loans may still qualify for the ERTC with respect to wages that are not paid for with forgiven PPP proceeds…

Remember… understanding these nuanced details about ERTC qualifications is crucial… Getting them wrong can lead to miscalculations and possible issues with IRS. It’s always best to consult with experts like JWC ERTC Advisory CPA to ensure you’re on the right track…

Also read: Employee Retention Credit Deadline 2023

Calculating Your ERTC

Here’s where we tackle your primary question about the employee retention credit calculation… The calculation isn’t straightforward – it depends on several factors like wages paid, health plan expenses, and the number of employees you have…

And here’s something important… If you’re struggling with understanding all these requirements or making accurate calculations, don’t hesitate to seek professional help… You see, taxpayers who have previously filed for ERTC but who are skeptical of their eligibility for the credits can engage JWC ERTC Advisory for an independent eligibility review.

Avoiding ERTC Scams

Beware of deceptions used by some firms promising easy qualification for these credits… Remember, you’re ultimately responsible for these tax credit claims. Don’t let any self-proclaimed “ERTC expert” convince you otherwise… If it sounds too good to be true, it probably is.

Also read: Employee Retention Credit Is It Real?

Why Choose JWC ERTC Advisory CPA?

In the recent crackdown on ERC promoters, the IRS has been taking steps to curb ERTC fraud… During these uncertain times, it’s vital that you partner with a firm like JWC ERTC Advisory CPA that not only understands the complexities of the credit but also adheres strictly to ethical practices…

Working with us eliminates your fear and uncertainty. Our team of experts ensures accurate calculations and guides you through each step of claiming your credits… But most importantly, we focus on helping you gain from this relief package…I hope this post has helped clarify some of your queries around the ERTC. Remember, accurate calculation and ethical practices are essential when dealing with tax credits… And as always, we’re here to help should you need any assistance navigating these complexities.

Jace W Campbell, CPA

Jace founded JWC ERTC Advisory CPA in March 2021 as the nation's first and only public accounting firm focused solely on ERC . . . and nothing else. He has personally signed over 9,000 ERTC claims and is proud to be executing these claims conservatively, and how intended by Congress.

He has a passion for educating clients so they can make the best decision for themselves.  If you read articles and watch videos that Jace produced in 2021, his approach is the same now as it was then.

While other firms pivot their messaging to comply with new IRS guidance, Jace continues preaching the same conservative principles that have helped clients recover hundreds of millions . . . while sleeping easy at night.

related posts:

Can You Claim Employee Retention Credit in 2023?

Can You Claim the Employee Retention Credit in 2022?

Employee Retention Credit Scams: What You Need to Know

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