1. What is the Employee Retention Credit (ERC) 2021?

The Employee Retention Credit (ERC) is a refundable tax credit for businesses that kept employees on payroll during the COVID-19 pandemic in 2021. It equals 70% of qualified wages paid, up to $10,000 per employee per quarter.

2. How Does the Calculator Work?

The calculator uses the ERC formula:

Where:

• Qualified Wages — Eligible wages paid to employees during qualifying periods
• 70% — The applicable credit rate for 2021
• $10,000 — Maximum qualified wages per employee per quarter

Explanation: The credit is calculated as 70% of qualified wages, capped at $7,000 per employee per quarter ($10,000 × 70%).

3. Importance of ERC Calculation

Details: Accurate ERC calculation helps businesses claim the maximum available tax credit, improving cash flow and supporting business recovery from pandemic impacts.

4. Using the Calculator

Tips: Enter total qualified wages for the quarter. The amount must be greater than zero. The calculator will compute the credit amount.

5. Frequently Asked Questions (FAQ)

Q1: Who qualifies for the ERC in 2021?
A: Businesses that experienced significant decline in gross receipts or were fully/partially suspended due to government orders.

Q2: What wages qualify for the ERC?
A: Wages and health plan costs paid to employees during eligible quarters, subject to specific eligibility criteria.

Q3: Is there a maximum credit per employee?
A: Yes, $7,000 per employee per quarter in 2021 ($10,000 qualified wages × 70%).

Q4: Can the ERC be claimed retroactively?
A: Yes, eligible employers can amend previous quarterly payroll tax returns to claim the credit.

Q5: Are there any limitations to the ERC?
A: The credit cannot be claimed on wages that were used for PPP loan forgiveness or other tax credits.