If you are trying to navigate the ERTC, Kaydee Ruppert, Dean Dorton Accounting & Financial Outsourcing Manager has put together a simple guide to help you maximize your benefits for this credit.

Using a calculator to determine eligibility and estimate savings is one of the best ways to streamline the process of qualifying for the ERTC. These tools are available online and take the guesswork out of determining your eligibility and estimated benefits. However, there are some important factors that must be taken into consideration before deciding whether to use a ERTC Calculator.

How Does the ERTC Work?

The ERTC is a tax credit that allows businesses to offset employment taxes such as federal wage withholding and employees’ share of social security and Medicare taxes. Originally, the credit was intended to encourage businesses to keep their employees during the pandemic. It has since expanded to include employees who work for businesses that receive Paycheck Protection Program (PPP) loan funds. Under CARES ACT 2020, companies that receive PPP loans are eligible to claim up to 50% of the wages paid to their employees.

To qualify for the ERTC, your company must have experienced a significant decline in gross receipts over the course of a quarter. This means that your sales must have fallen by 20 percent or more compared to the same quarter last year.You also need ERC Calculator to be a small business.

A small business is defined as a company with 500 or fewer full-time employees. Moreover, your business must be operated by a qualified individual and have been fully or partially suspended due to the COVID-19 pandemic.

Eligible wages for the ERTC are those that were paid to your qualified individuals during the time when your business was suspended due to the COVID-19 pandemic. For this purpose, you must identify the dates for each quarter that your business was closed or limited in operations. Then, you must calculate each employee’s qualified wages for that quarter. Afterwards, you must multiply each employee’s qualified wages by a factor of 50 to determine the amount of ERTC they are eligible for.

Lastly, you must exclude the amount of your own payroll and any payments made by your company to reimburse or pay for employee health insurance costs. Additionally, you cannot claim the amount of PPP loan forgiveness or shuttered venue operator grants as part of your ERTC calculation.

The ERTC is a great tool to help your business during this challenging time. However, it is imperative that you know all of the details before determining your eligibility. Use our ERTC Calculator to simplify the process of calculating your potential savings. If you have any questions, please feel free to reach out to our team. We would be happy to help!