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Employee Retention Credit Flowchart – Are You Eligible?

The CARES Act created a refundable Employee Retention Credit (“ERC”) for employers. Originally, the only employers eligible for this tax credit were those that did not receive a PPP loan. That all changed with the passage of the new Consolidated Appropriations Act that was signed on December 27, 2020. Subject to qualification, this new law makes all employers eligible for the ERC retroactive to March 13, 2020, even if they received a PPP loan.

The credit, originally scheduled to expire on December 31, 2020, has been extended through June 30, 2021.

Since the eligibility requirements are unique to each taxpayer, we cannot make these determinations for you. To assist you in making an eligibility determination, please refer to the below Employee Retention Credit flowchart. If you determine that you are eligible for one or more quarters, please contact your payroll tax provider, as the credit is claimed on the Employer’s QUARTERLY Federal Tax Return, Form 941. There is an option to claim the credit in advance for 2021, using Form 7200 (Advance Payment of Employer Credits Due to COVID-19).

Please note there are two flowcharts – one for 2020 and one for 2021. The rules re. eligibility and the credit calculations are slightly different for 2020 and 2021.

If you have any questions, please don’t hesitate to contact us. Visit our Stimulus Package Headquarters for more resources.

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