If you’re an employer in Indiana, you may still be experiencing financial difficulties caused by the COVID-19 pandemic. However, a program called the Employee Retention Credit (ERC) can provide some relief to your company through a valuable tax credit. This credit was created as a part of the CARES Act in 2020 and has been extended and expanded to assist businesses impacted by the pandemic. In this article, we’ll provide all the necessary information about the ERC in Indiana, including eligibility requirements and how it can benefit you as an employer.
To be eligible for the ERC in Indiana, employers must meet certain conditions. Initially, the credit was only available to companies that had experienced a significant drop in revenue or were forced to close by the government. However, the eligibility criteria were expanded. Now, employers can apply for the ERC if they suffered a significant decrease in gross receipts in 2020 or 2021, regardless of government orders. Additionally, businesses can qualify if their operations were fully or partially suspended due to COVID-19-related restrictions.
Calculating the ERC
To determine the Employee Retention Credit (ERC), the wages paid to eligible employees during a specific period are considered. Retained and furloughed employees’ wages are eligible if a business has 500 or fewer full-time employees. The credit is 70% of qualified wages, with a maximum of $10,000 per employee per quarter. This means employers can receive a credit of up to $7,000 per employee per quarter for the first three quarters of 2021. A credit of up to $5,000 per employee can also be claimed for 2020, resulting in a total credit of $26,000 per employee.
Interaction with other relief programs
The CARES Act of 2020 prevented businesses receiving a PPP loan from qualifying for the ERC. However, new legislation introduced in 2021 allows employers to qualify for both programs. It’s crucial to note that the wages used for PPP cannot be the same as those used for ERC.
Claiming the ERC
In order for employers to receive the ERC, they are required to declare their eligible wages and the credit amount on their quarterly employment tax returns, specifically on Form 941-X. Alternatively, employers can reduce their federal employment tax deposits by the expected credit amount by submitting Form 7200 if they are eligible.
During difficult times, Indiana-based employers can receive substantial assistance through the Employee Retention Credit (ERC). This credit provides vital financial aid and encourages businesses to retain their employees. In order to make the most of this initiative, it’s essential to understand the eligibility requirements, accurately calculate the credit amount, and effectively coordinate with other relief programs.
Employers should ensure they are updated and seek guidance from experts specializing in the Indiana Employee Retention Credit (ERC) to get the latest information and guidance.
Bottom Line Concepts Can Help You Claim the ERC in Indiana
If you want to claim the ERC for wages paid in 2020 and the first three quarters of 2021, you need to file the Employer’s Quarterly Federal Tax Return or Form 941-X. It’s important to keep in mind that eligibility and calculating the tax credit amount can be complicated. To ensure you receive the credit you’re entitled to, submitting accurate forms to the IRS is crucial.
Bottom Line Concepts has assisted more than 25,000 businesses, including many in Indiana, with enrolling in the ERC program. If you’re unsure about your eligibility for this valuable credit and need guidance on how to claim it, please contact us immediately. We’re here to assist you.
