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If you have multiple companies, input and qualify each company separately.
This is for estimate purposes only. The actual credit is based off of documents submitted. Potential ERC amount is based off the average count qualifying for all 6 quarters of the ERC program.
The Employee Retention Credit (ERC) is a stimulus program created by the CARES Act that offers employers a significant refundable tax credit for retaining employees during the pandemic. The following questions will determine if your business qualifies.
A full-time employee is classified as someone that worked at least 30 hours per week, or 130 hours per month in 2019. Remember, this question is based on the average amount of employees during 2019.
Important: The IRS aggregate rule applies to the ERC credit. If your company has common ownership with other companies, please take into account all associated businesses when calculating this question.
Example: The business owner was the majority owner of ABC Company, which averaged 50 FT employees in 2019. The same business owner was also the majority owner of 123 Company, which averaged 75 FT employees in 2019. According to the aggregate rule, the employee count of both companies must be combined for the ERC program. Although both companies can be entered for the program, they would both be classified as having over 100 employees.
Note: Businesses with over 100, but under 500 FT employees in 2019 do not qualify for ERC funds in 2020. Businesses with over 500 FT employees in 2019 do not qualify for the ERC program, except for actual wages paid to employees that did not work due to a government shutdown.
Part-Time Employees: Part-time employee wages do qualify for the ERC program. This question only requires full-time employee count to determine qualification.
There are three ways to qualify for ERC. Please answer the questions in the following sections to determine your eligibility for the program.
The most straightforward way to qualify for the Employee Retention Credit is from a qualified revenue reduction during the qualification period of the program.
Since you did not have a 20% revenue reduction in Q1 2021 as compared to Q1 2019, you can utilize the previous quarter to potentially qualify.
Supply chain disruption is a common qualification for businesses that rely on vendors and suppliers for their business to function properly. This qualification must have resulted from a government suspension order to your supplier that resulted in the supplier not being able to deliver critical goods, but may continue beyond the original suspension order. The specific requirements for this qualification are listed below.
These impacts qualify a company regardless of revenue gain or loss.
Please reference the IRS notices pertaining to supply chain disruption qualification: Notice 2021-11 & Notice 2021-20.
The partial or full shutdown qualification is based on a "suspension test" to demonstrate that your operations were partially or fully suspended due to a Covid-19 governmental order. Keep in mind that a government restriction may have had a direct impact on your operations even though that shutdown order wasn't given to you directly.
Important: This qualification only applies during the period of the actual government order. Since there were very few government shutdown orders during 2021, the actual shutdown type of this qualification mainly applies to 2020 quarters. However, if the impact of shutdowns affected your business beyond the actual shutdown period, this qualification may apply.
Please reference the IRS notices pertaining to suspension qualification: Notice 2021-23, Notice 2021-33 & Notice 2021-49.
More than Nominal Impact - The partial suspension from a government order must have had a more than nominal effect, which means it affected more than 10% of business operations. This impact can come from a reduction in business hours of 10% or more, or a suspension of your business operations that represented 10% or more of gross receipts as compared to 2019. (This does not mean that a 10% reduction in sales is required to qualify, but the order must have suspended at least 10% of your revenue-producing operations.)
Hourly example: Government orders required a restaurant to close 2 hours early due to curfew requirements. The 2 hours represented 15% of the business working hours. This business qualifies for the period affected by the government order.
Gross receipts example: Government orders required a radiology clinic to stop elective procedures during Q2 & Q3 of 2020. The business reviewed its gross receipts for Q2 & Q3 of 2019 and determined that the suspended elective procedures represented 18% of its total gross receipts during those quarters. This business qualifies for these two quarters.
Note: For any periods you qualify you will be required to provide a brief description of the more than nominal effect on your business to substantiate your claim.
The cumulative effect of the full or partial suspensions must have had a more than 10% impact on your business operations when considering the gross receipts of that portion of your business in 2019. This does not mean that your revenue must have decreased to use this qualification.
Depending on your qualifications, you will see your substantiation statements below. These statements will be retained to substantiate your claim with the IRS.
The statement below is for the first suspension only. The statements for additional suspensions will be identical, with the insertion of specific details for each suspension impact.
Estimated credit amount
This is an estimate based on the responses and employee counts provided and is not a guarantee of your credit amount or qualification. Many factors are evaluated during your ERC analysis. If we determine you qualify, this number could be much higher or lower.