The COVID-19 pandemic has affected every sector of the economy, and healthcare providers have been no exception. As a result, many medical and dental practices, hospitals, and other medical facilities have faced financial challenges over the past several years.
To help alleviate some of these difficulties, the federal government introduced the Employee Retention Credit (ERC) as part of the CARES Act in 2020. This refundable healthcare employee retention credit provides cash relief to eligible employers for retaining their employees during the pandemic.
Hospitals and medical and dental practices are eligible for the ERC, even if they received Paycheck Protection Program (PPP) loans. However, the credit can’t be claimed for the same wages used to calculate PPP loan forgiveness.
How Much Is the ERC Worth?
The credit is worth up to $5,000 per employee for 2020 ($7,000 per employee per quarter in 2021) and can be claimed against employment taxes. Eligible employers can receive the credit for wages paid from March 13, 2020, to September 30, 2021.
The ERC was extended through 2021 by the Consolidated Appropriations Act. The American Rescue Plan Act (ARPA), passed in March 2021, also expanded eligibility for the ERC to new businesses and certain severely impacted employers. It also increased the maximum credit amount to $7,000 per employee per quarter, up from the $5,000 annual maximum in 2020.
One of the key advantages of the ERC is that it is a refundable tax credit. It means that if the credit exceeds the amount of employment taxes owed, the excess will be refunded to the employer. This can provide a significant cash infusion for medical facilities and healthcare practitioners that have struggled to stay afloat during and after the pandemic.
ERC Eligibility for Healthcare Providers
Hospitals and medical and dental practices should determine their overall eligibility to take advantage of ERC eligibility for healthcare providers. In general, eligible employers are those that experienced a significant decline in gross receipts or were fully or partially suspended by a government order due to COVID-19.
If eligible, healthcare providers should carefully calculate the credit and fill out Form 941 accurately. Mistakes on the form can result in penalties and interest, so it’s essential to take the time to ensure everything is correct.
Bottom Line Concepts helps healthcare providers and hospitals maximize their ERC by accurately calculating the ERC and assisting with all necessary forms. Our experienced ERC experts will guide you through claiming your tax credit to maximize the claim for your healthcare facility or practice.
Contact us today to see if you qualify.