Disclaimer: This is general tax advice so don’t sue me. It seems like every other month there’s a government handout for churches. I don’t know about you, but the abbreviations and the paperwork can become overwhelming. Well…here’s another one. The Employee Retention Credit (ERC) is actually an older program that was overshadowed by the PPP Loans. If you never heard it or have forgotten about it, join the club. This is a credit you can receive to help retain employees even though your ministry is being impacted by COVID.
Here’s the gist of it:
- Payroll Tax Credit: This is like the FFCRA in that it is a refundable credit to your payroll taxes. That means you applye for it through the Form 941.
- $7,000/Employee: For the first half of 2021, you can receive up to $7,000 per employee per quarter. Doesn’t apply to clergy employees though.
- Negatively Impacted: You need to have 1)had a 20% decrease in Gross Receipts in a quarter when compared to 2020, or 2)had operations fully or partially suspended due to government orders.
- No Overlapping: If you receive a second PPP Loan, the wages covered by that loan aren’t eligible for ERC.
- Form 941: https://www.irs.gov/pub/irs-pdf/f941.pdf
- Form 941 Instructions: https://www.irs.gov/pub/irs-pdf/i941.pdf
- Wespath’s ERC Guidance: https://www.wespath.org/assets/1/7/5677.pdf
- IRS’s ERC Summary: https://www.irs.gov/coronavirus/employee-retention-credit
- IRS’s FAQ for ERC: https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act
- AGC Solutions YouTube Channel: https://www.youtube.com/channel/UCICcKk_CZPNIsUY0DmhzGbg
- AGC’s Applying for ERC for 2020: https://www.youtube.com/watch?v=ZkVWh3a8A1w
- AGC’s Top 10 ERC Questions: https://www.youtube.com/watch?v=mWLJ3Py86Lw
- FFCRA Tax Credit: https://jctaccounting.com/2021/04/20/ffcra-tax-credit-what-about-the-vaccine/
- PPP Loan 2nd Draw: https://jctaccounting.com/2021/01/11/applying-for-second-round-of-ppp-loans/