ertc eligibility

Employee Retention Tax Credit Eligibility

Many companies are looking for ways to keep their employees happy and engaged. One way of doing this is through the Employee Retention Tax Credit (ERTC).

This tax credit can help businesses with eligible wages paid to retain or rehire certain workers that have been affected by COVID-19. The ERTC can be beneficial for many organizations struggling with employee retention due to pandemic-related layoffs and reduced hours.

It allows them to receive a federal income tax credit equal to 50% of qualified wages up to $10,000 per employee in 2020 and 2021. Employers must meet specific criteria in order to qualify for these credits, which will be discussed further in this article.

Who Is Eligible For The Employee Retention Tax Credit 2023?

Companies that have experienced business disruption due to the COVID-19 pandemic may be eligible for a tax credit called the employee retention tax credit. The IRS has recently updated their rules on eligibility, so companies should check with them directly to make sure they qualify.

To be eligible, businesses must meet certain criteria.

For example, employers must show that their gross receipts were less than 80% of what it was during the same period in 2019 or 2020. They also need to prove that there was significant government shutdown or restriction related to the coronavirus pandemic and how it affected their operations.

In addition, employers must provide evidence that their workforce had been reduced by at least 20%, either through layoffs or furloughs from February 15th – December 31st 2021.

This is one way for employers to ensure that they are able to receive the full amount of this tax credit when filing taxes for 2022 and beyond.

Employers who believe they fit these requirements should contact their accountant or lawyer right away to discuss any additional steps needed in order to properly file for the employee retention tax credit in 2023.

Knowing what forms are required and which deadlines need to be met will help prevent delays and reduce stress come time for filing taxes next year.

Who Is Not Eligible For Employee Retention Credit?

Many businesses are in need of help right now due to the pandemic, and one way they can get assistance is through an employee retention tax credit. But not all businesses are eligible for this benefit. There are certain criteria that must be met in order to qualify.

To begin with, companies must have seen a decline in gross receipts compared to their previous year’s earnings. If their gross income has declined by more than 20%, then they may quality for the tax credit.

Additionally, employers cannot receive payouts from the Paycheck Protection Program (PPP) loan forgiveness program and still be eligible for the employee retention tax credit at the same time. Companies that received loans under PPP will usually not meet the requirements set out by the IRS for ERTC eligibility as well.

Lastly, only companies who file taxes on Form 941 are allowed to apply for the employee retention tax credit. Businesses operating as sole proprietorships or partnerships typically do not fall into this category and therefore won’t be able to take advantage of it either.

How Many Employees Do You Need To Qualify For Employee Retention Credit?

The employee retention tax credit is a great way for businesses to get some financial help during difficult times. To qualify, companies need to have certain criteria in place. One of the requirements is how many employees they must have on their payroll.

To be eligible for this credit, businesses need to employ at least 100 full-time workers or an equivalent combination of part-time and full-time workers. The number of employees used for the calculation can change depending on what quarter the business applies for the credit in.

For example, if a company has 75 full-time workers and 25 part-time workers in one quarter but then only 50 full-time workers and 50 part-time workers in another quarter, they would still meet the eligibility criteria as long as both quarters combined equal at least 100 full time equivalents (FTEs).

When applying for the employee retention tax credit it’s important to note that only wages paid between March 12th 2020 and January 1st 2021 will count towards reaching the threshold FTE requirement. Also, any wages that are paid by other relief programs such as Paycheck Protection Program loans do not count towards meeting this criterion either.

Businesses should also consider all related entities when calculating their total FTE number since those employees may also be counted towards meeting the minimum amount required for eligibility.

Calculating FTEs correctly ensures businesses don’t miss out on potential savings from taking advantage of this valuable tax break!


The employee retention tax credit 2023 is a great way for businesses to save money. Companies who have kept their employees on the payroll during this difficult time are eligible for the credit and can receive up to $5,000 per employee each quarter.

In order to qualify, companies must employ at least 50 people in total across all locations or 100 full-time employees if they only operate one location. It’s important that employers understand the requirements of this program so they don’t miss out on any potential savings.

By taking advantage of this incentive, businesses will be able to stay afloat while supporting their current staff members and helping stimulate economic growth.