Are Clergy Eligible For Employee Retention Credit?
How to Claim the Employee Retention Tax Credit as a Church
Are you a clergy member or organization of faith wondering if you are eligible for the new Employee Retention Credit (ERC)?
Well, with the Consolidated Appropriations Act 2021 repealing the provision that prevented religious organizations from obtaining a Paycheck Protection Program loan and claiming a credit, churches now have access to this financial benefit to combat economic fluctuations, labor market challenges, and COVID-19 mandated restrictions.
So don't wait any longer - take advantage of this opportunity and liberate yourself from financial hardship today.
Are Clergy Wages Eligible for Employee Retention Credit?
With the economic fluctuations, labor market challenges, and government restrictions caused by COVID-19, churches have been struggling to stay afloat - but there's hope in the form of the Employee Retention Credit (ERC). Clergy are eligible for this tax credit if their church meets certain criteria.
The ERC is a payroll tax credit available to eligible organizations that have seen a decline in revenue due to the pandemic. It allows them to take advantage of up to $5,000 per employee for 2020 and $7,000 per employee per eligible quarter in 2021.
The great thing about ERC is that it has no strings attached; churches can spend the funding as they see fit. This could be beneficial for churches struggling with uncertainty whether parishioners will return to in-person service or events of the past two-plus years.
To claim this credit, churches must file quarterly Form 941 and amend their payroll tax returns by April 15th 2024 (for 2020) or April 15th 2025 (for 2021).
Before claiming ERC, churches should make sure they understand eligibility factors and wages/benefits that may be used when calculating the credit.
With this financial assistance available through ERC, clergy now have more resources than ever before to weather these tough times caused by COVID-19.
Do Churches Qualify for Employee Retention Credit?
Churches that have experienced partial suspension of operations due to government mandates can still qualify for the ERC, regardless of their 2020 or 2021 gross receipts. To claim the employee retention credit (ERC), eligible churches must file quarterly Form 941 and amended payroll tax returns for qualifying periods.
Here's what churches should know about claiming the ERC:
- Eligible churches that file a quarterly Form 941 can the claim credit
- Churches have the flexibility to use the funding as they choose
- ERC offers credit of $5,000 per employee for 2020 and $7,000 per employee per eligible quarter for the first three quarters of 2021 depending on wages and benefits paid during the applicable time period
The Consolidated Appropriations Act of 2021 has removed a previous restriction which prevented organizations from obtaining Paycheck Protection Program loans while also being able to claim an Employee Retention Credit.
Churches that experienced partial suspension of operations due to government-mandated restrictions can also qualify for ERC even if their gross receipts did not significantly dip during either 2020 or 2021.
How Do I Claim the Employee Retention Credit As a Church or Clergy Member?
By amending their payroll tax returns, churches can access the much-needed funding that comes with claiming the ERC - potentially providing a lifeline to their operations.
Churches that experienced government-mandated restrictions, either fully or partially suspended operations, can still qualify for ERC even if they didn't experience significant decline in gross receipts during 2020 or 2021.
To re-iterate, the maximum credit each employee can generate is $5,000 for 2020 and up to $7,000 per eligible quarter in 2021 depending on wages and benefits paid during applicable time period.
More and more businesses are becoming aware of this critical and advantageous tax credit. Therefore, processing time is increasing. To get started today and begin fast-tracking your claim, click the button below to be taken to the secure Linqqs portal and fill out the brief qualification form.
Employee Retention Tax Credit 2023 Deadline
Now that we know the qualifications for the Employee Retention Tax Credit, let's move on to when it needs to be filed by.
The present deadline is April 15th, 2025.This means that if you are looking to apply for this credit during any of these years, make sure you do so before those dates.
It’s important to note that even though there are many opportunities throughout the year to apply for different tax credits or deductions, ERC only has a single filing window per year. So don't miss out! It’s also worth noting that applying late could mean that you won't qualify for the maximum amount possible.
When it comes down to it, making sure you take advantage of all available credits and deductions is essential when filing taxes - especially ones like ERC which have such a short window of opportunity each year. Keep an eye out and make sure not to miss deadlines or else you may end up losing out on some valuable savings.
Frequently Asked Questions
What is the Employee Rentention Program (ERTC)?
The Coronavirus Aid, Relief, and Economic Security Ac, signed into law on March 27, 2020, included two programs to assist businesses with keeping workers employe: Employee Retention Tax Credit (ERTC) administered by the Internal Revenue Service and the Payroll Protection Program (PPP) administered by the Small Business Administration.
How is ERTC different from the Payroll Protection Program(PPP)?
PPP funds are not taxable as revenue and you may still take deductions for the payroll covered by PPP. The funds from the PPP are distributed based on 2.5 months of payroll and a minimum of 80% of the funds must be used on payroll to be eligible for forgiveness.
ERTC tax credits, however, are credits (or refunds) for a percentage of payroll in each quarter that you qualify. There are specific rules for determining eligibility by quarter, and limiting the dollars that can be claimed for each employee.
If I Received Funds from the PPP, Do I Still Qualify for the ERTC?
The short answer is “Yes”. You can claim ERTC even if you received PPP funds. In March of 2021, The American Rescue Plan Act of 2021 created expansions and modifications to existing criteria of Employee Retention Tax Credit.
Businesses that received PPP funds could now also claim ERTC tax credits. ERTC credits can be retroactively claimed for businesses that qualified in 2020. The ERTC qualification period was extended through 9/30/21 with lower eligibility requirements.
The refundable credit amount increased from 50% of qualifying wages in 2020 to 70% in 2021. The per-employee cap on qualifying wages was increased from $10,000 for all of 2020 to $10,000 per quarter for the first 3 quarters of 2021.
How Do I Apply for the Employee Renention Tax Credit and My CPA Do This?
Unlike the Payroll Protection Program, there is technically no application process for the Employee Retention Tax Credits. You would simply claim the ERC tax credit like any other tax credit by asserting to the IRS that you can legally claim the credit.
Whether your tax accountant is a CPA or EA, they most likely only prepare Federal and State Income Tax Returns. However, ERTC credits are claimed against Employment Taxes on Form 941, and cash advanced through Form 7200.
The ERC program is quite complex, which one of the main reasons most CPA's do not mention or attempt the claim process. It is also the reason most businesses pursued the PPP loan instead.
For prior quarters, you must file an amended form (the Form 941-X) to reduce your current quarter’s tax contribution. Also, you must request a refund of excess credits.
ERC Specialists focus only in this specific tax credit in order to maximize refunds, ensure accuracy, bulletproof your claim and save time. ERC Specialists provide audit protection and peace of mind.
Click the button below to start your claim