The Employee Retention Credit can be worth up to $26,000 per employee and can be a significant help for businesses that have been impacted by the economic downturn caused by the pandemic. In this guide, we'll walk you through the steps to calculate your ERC and claim the credit on your taxes. Although be warned as this process can be very confusing and equally as time consuming. If you want to get through the application process quickly and easily we recommend using a 3rd party like Bottom Line Concepts.
To calculate your ERC, you'll need to gather information about the wages that you paid to your employees during the year. Specifically, you'll need to know the total amount of qualified wages that you paid to each employee, as well as the number of days that each employee worked for you.
Once you have this information, you can calculate your ERC by multiplying the total amount of qualified wages by 50% (0.50). Then, you'll need to claim the credit on your taxes by completing Form 941, Employer's Quarterly Federal Tax Return, or Form 943, Employer's Annual Federal Tax Return for Agricultural Employees.