The CARES Act includes an Employee Retention Tax Credit (“ERC”), a fully refundable tax credit for employers equal to seventy percent (70%) of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees in each quarter in 2021, or fifty percent (50%) of qualified wages for the 2020 calendar year. Employers can claim an ERC of up to $7,000 per calendar quarter per employee for qualified wages paid between January 1, 2021 and December 31 2021, and up to $5,000 per year for wages paid between March 13, 2020 and December 31, 2020.
Case Study #3
Christian Assisted Living
Approximately 200 Employees
Received Paycheck Protection Program (PPP) funds
Eligible by business suspension
Cumulative ERC to Date: $950,000
The Assisted Living Facility was considered to be a large employer for 2020 (more than 100 full time employees), so they were only able to capture non-service wages and employer paid healthcare costs. Since the facility was considered a small employer for 2021 (less than 500 full time employees), the Facility was able to capture all wages paid and employer paid health insurance costs – greatly increasing their credit potential.