Covid-19 Tax credit eligibility

Jump to: ERC | EFMLA | EPSL | FAQs

Almost every employer is eligible for some or all of the credits. Here's a quick worksheet to help you determine if you might be. [For detailed information about these credits, see our COVID-19 resources.]

Let’s start with the big credits.

 

Employee Retention Credit (ERC)

The biggest one is the Employee Retention Credit. If eligible, the max amount is $19k per employee. Here are a few questions to help see if you qualify.

2021:

We’ll start with the credits available for 2021 because they give you the highest amount and are the easiest to qualify for. Here’s how you know if you’re eligible:

  • In the 4th quarter of 2020, did your company experience a reduction of 20% in gross receipts (revenue/sales) compared to the 4th quarter of 2019?
    • If yes, you’re eligible for the 1st quarter of 2021.
    • If no, is the company experiencing a drop in revenue now (1st quarter 2021)? If you don’t know yet, you can reach out to us at the end of the quarter and we can request a refund.
      • Did your company have a full or partial closure by government mandate? For that period you're eligible.

2020:

  • Did your company experience a 50% gross receipt reduction in any quarter in 2020?
    • If 2nd quarter, you’re eligible from beginning of 2nd quarter until the end of the 3rd quarter.
  • Did the gross receipts restore to a level of 80% or more in any quarter, compared to the same quarter of 2019?
    • If yes:
      • If in the 3rd quarter, eligibility ends that quarter.
      • If in the 4th quarter, you’re eligible until the end of the year (4th quarter).
    • If no:
      • Did you have a partial or full mandated govt closure during 2020?
        • If yes, the wages paid during that period are eligible for the tax credit.

Now let’s see which wages are eligible for credit, based on the size of your company:

  • <100 employee = all wages
  • 100-500 employees = in 2020, only wages paid for not working. In 2021 all wages.
  • >500 employees = only wages paid for not working

How to get the credits:

  1. Fill out ERC Opt-In Agreement and make sure to select the type of employer you are, the effective start, and the effective end date (if applicable).
  2. Fill out the Amendment Agreement if you want us to also amend prior quarters that were already filed prior to your opt-in for this credit.
  3. Send us a list of employees that are considered a related individual that should be excluded from the Employee Retention Credit.
  4. Email it to CS@brandspaycheck.com
  5. It will be processed, and our customer support department will confirm when your company has been set up.

IMPORTANT NOTES:

  1. Before you return the forms, be sure to consult your accountant because he knows your books and can confirm that you are in fact eligible.
  2. As soon as you become ineligible, it is your responsibility to let us know immediately so we stop calculating tax credits.

[If we do it correctly, you get kosher money. If not, you may end up with interest in money owed to the IRS.]



Emergency Family and Medical Leave Expansion Act (EFMLA)

  • Did you pay employees when they weren’t working because they were taking care of children while their school was closed?
    • You need to reclassify the wages. Send us a list of the employees, amount paid, and which quarters. Our payroll team will amend it for you.

 

Emergency Paid Sick Leave (EPSL)

  • Did you pay employees while they were out sick or taking care of someone who was sick?
    • You need to reclassify the wages. Send us a list of the employees, amount paid, and which quarters. Our payroll team will amend it for you.



FAQs

But I got a PPP loan and I thought that disqualifies me from tax credits?

  • On December 27, 2020 the law was changed. It applies retroactively and those who took the loan are still eligible.
  • It excludes the wages you paid using the PPP. We automatically calculate that in our system.

 

How much can I get?

  • ERC: $5000 + $7,000 + $7,000 = $19,000
    • 2020 = Up to 50% of $10,000 in wages (=$5,000) per employee, for the year
    • 2021 = Up to $7,000 per employee, for the 1st quarter
                   Up to $7,000 per employee, for the 2nd quarter
  • EFMLA: $10,000 + 7.65% = $10,765
    • Tax credit plus employer social security and medicare

  • EPSL: $5,110 + 7.65% = $5,500
    • Tax credit plus employer social security and medicare

 

Are there any exclusions?

  • Relatives are not eligible for the employee retention credit.

 

How do I get the credit?

  • For 2020, fill out the forms to request amendments for the tax returns.
  • For 2021, we’ll set up the company per your request to get the full credit for each quarter.

 

 

 

 

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