Five Things to Know About the Employee Retention Credit

Jennifer S. Kelsch

Have you heard of the Employee Retention Credit? If you haven’t heard of it, or you haven’t considered seeking this support, take two minutes to listen to Jen Kelsch, GAR Foundation’s Chief Financial Officer, as she shares five things you need to know about the Employee Retention Credit.

What is the Employee Retention Credit?

The Employee Retention credit is a payroll tax credit that is refundable to organizations. It was part of the CARES Act that was issued to encourage employers to continue paying their employees during the pandemic.

Who qualifies for the tax credit?

Any organization that continued to pay their employees from March of 2020 when the pandemic started through all of 2021 may qualify. There are a few hurdles to keep in mind. For example, the organization either had to be shut down by government order, or they had to experience a significant decline in their  gross receipts. To find more information about these terms and how the CARES Act defines them visit the IRS’ website.

What if I took out PPP funds during the pandemic?

Yes; you can still qualify for the employee tax credit even if you took out Payroll Protection Program funds during the pandemic. But doing so can be more complicated. The PPP offered a forgivable loan based on the wages that they paid their employees during Covid. The important thing to know is that you can’t receive government relief on the same wages twice. In other words, you can’t claim the employee retention credit on wages for which you received PPP relief.

Who on my team should apply for the credit?

It’s complicated and multiple people may need to be involved. Your top financial professional person in your organization should look at the program and work with a qualified advisor like a CPA or a payroll tax company to make sure the claim is proper.

How long do I have to claim it?

The employee retention credit can be claimed until 2024. [I thought Jen said through 2024??] Every organization should look into whether or not they qualify because it’s real money. It’s a government program for organizations that continued to pay their employees during the pandemic, and it can be especially helpful for nonprofit organizations who saw a drop in their fundraising or revenues during that time.

Of course, there’s no way we can provide financial advice or cover all the details in a blog post. But for these five reasons and others, we think the Employee Retention Credit is something any nonprofit should be considering. More information can be found here or by calling your financial advisor.