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 changed with the passage of the Consolidated Appropriations Act, signed into law on December 27, 2020. Subsequently, the ERC has been extended and expanded by the American Rescue Plan Act, signed into law on March 11, 2021. 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, and subsequently extended through June 30, 2021 and December 31, 2021, has been most recently amended to end on September 30, 2021, except for Recovery Startup Businesses.

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.

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