Are you wondering if you qualify for the Employee Retention Credit (ERC)? The answer depends on your gross income and the number of employees you have. If your gross income has decreased by more than 20%, you may be eligible for the credit. Even if you have more than 500 employees, you may still qualify as an employee with serious problems.Payments made in connection with the termination of a former employee's employment relationship are not considered qualifying wages for the ERC. This includes the minister's salary and stewardship allowance.
Qualified wages are calculated without taking into account federal taxes imposed or withheld, including the employee or employer's share of social security taxes, the employee and employer's share of Medicare taxes, and federal income taxes that must be withheld.Wages paid to employees for the hours for which they provided services are not considered qualified wages for the ERC. However, if an employee is not providing services due to the closure of their branch office, but they receive 50 percent of their normal hourly wage, their employer can treat the wages paid as qualifying wages for the ERC.Amounts paid to authorized real estate agents of real estate brokerage firm Y do not constitute wages within the meaning of section 3121 (a) of the Code and, therefore, are not qualified salaries for the purposes of the ERC. Payments, including severance payments, made to a former employee after the termination of the employment relationship are also not considered qualifying wages for the ERC.For employees whose hours were reduced by 40 percent but who are paid 100 percent of their normal wage, their employer can treat 40 percent of their salary as qualifying wages for the ERC. In addition, any qualifying wages that are taken into account for the ERC cannot be taken into account for the paid family medical leave credit under section 45S of the Internal Revenue Code (the Code).For employers who have reduced their employees' working hours but still pay them 100 percent of their normal wage, 80 percent of their salary can be treated as qualifying wages and they can apply for an ERC for 80 percent of that salary.
The 60 percent of wages that employers pay to administrative staff for hours during which they actually provide services are not considered qualifying wages.