Here are some of the key points:
• The ERC provides a refundable credit of up to $5,000 for each full-time employee retained between March 13 and Dec. 31, 2020 and up to $14,000 for each retained employee between Jan. 1 and June 30, 2021.
• A ministry will qualify if ordered to fully or partially shut down. Virtually every ministry was/is partially shut down!
• You can claim your credit immediately by reducing payroll taxes sent to the IRS.
• If your credits exceed payroll taxes, you can request a direct refund from the IRS for the difference…up to $19,000 total for each qualifying employee!
• The new law, retroactive to March 27, 2020, now allows ministries who received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages not treated as payroll costs in obtaining forgiveness of the PPP loan.
So, if you had 10 qualifying employees, you could receive up to $19k per employee (either in a credit or refund). While you won’t necessarily receive $19k per employee, many/most will qualify.
Here at ChurchWest, we are neither the payroll nor the tax experts, but we are bringing in the Tax & Finance manager from the ministry payroll specialists at MinistryWorks (along with an attorney to discuss how to document a full or partial shutdown) to discuss the nuances of the credit/refund, who does & doesn’t qualify, how it relates to the PPP, etc.