• Schoelles and Associates

ERC Changes 2021

Excerpt courtesy of RIPFLI Gregory Butler, CPA

As noted above, the ERC was set to expire on December 30, 2020. The CAA extended the ERC for wages paid from January 1, 2021, through June 30, 2021.

In addition, the ERC eligibility and limits were changed as follows:

  • Reduced the quarter over quarter gross receipts decline from 50% to 20%, comparing the 2021 calendar quarter to the corresponding quarter in 2019 (rather than 2020).

  • Increased the ERC wage limit to $10,000 per employee per quarter rather than $10,000 per year.

  • Increased the ERC percentage from 50% to 70% of gross wages.

  • Increased the “large employer” full time employee limit from 100 to 500.

  • Clarified that ERC wages can not be used for several other tax credits — most notably WTOC and R&D.

  • Increased eligible employers to include certain governmental entities.

  • New employers who were not in existence for all or part of 2019 can use the comparable 2020 calendar quarter to determine the extent of the decline in gross receipts.

The CAA extended the ERC for wages paid from January 1, 2021, through June 30, 2021.

In addition, the ERC eligibility and limits were changed as follows:

  • Reduced the quarter over quarter gross receipts decline from 50% to 20%, comparing the 2021 calendar quarter to the corresponding quarter in 2019 (rather than 2020).

  • Increased the ERC wage limit to $10,000 per employee per quarter rather than $10,000 per year.

  • Increased the ERC percentage from 50% to 70% of gross wages.

  • Increased the “large employer” full time employee limit from 100 to 500.

  • Clarified that ERC wages can not be used for several other tax credits — most notably WTOC and R&D.

  • Increased eligible employers to include certain governmental entities.

  • New employers who were not in existence for all or part of 2019 can use the comparable 2020 calendar quarter to determine the extent of the decline in gross receipts.

Link to full article: https://www.wipfli.com/insights/articles/tax-covid-19-consolidated-appropriations-act-changes-employee-retention-credit#:~:text=ERC%3A%202021%20CAA%20changes&text=The%20CAA%20extended%20the%20ERC,%2C%20through%20June%2030%2C%202021.&text=Increased%20the%20ERC%20wage%20limit,to%2070%25%20of%20gross%20wages.

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