Employee Retention Credit

Assisting economically impacted companies to keep employees on the payroll.

What is the Employee Retention Credit?

The Employee Retention Credit (ERC) is a refundable tax credit that was established as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. Its purpose was to encourage businesses to keep employees on their payroll during the economic hardships brought on by the COVID-19 pandemic.

The CARES Act introduced the latest ERC to encourage companies to maintain their payroll. This ERC is a refundable credit that businesses can claim on qualified wages paid to employees during 2020 and 2021.

employee retention credit laptop

The ERC provides a refundable employment tax credit, up to $5,000 per employee for 2020 and up to $21,000 per employee for 2021.

In 2020, it entitled employers to a 50% credit (maximum of $5,000 per employee) of the qualified wages paid to employees. This amount increased to 70% (maximum of $7,000 per employee, per quarter) for 2021 with the American Rescue Plan Act (ARPA).

Under the recently enacted American Rescue Plan Act (ARPA – Mar.2021) and previously under the Consolidated Appropriations Act, 2021, the employee retention credit, a provision of the CARES Act, is extended and expanded. With the signing of the Infrastructure Bill in November 2021, the ERC program was cancelled for Q4 of 2021. The ERC can be claimed through September 30, 2021 by eligible employers who retained employees.

On September 15, 2023, the IRS issued an immediate moratorium on the processing of ERC claims filed on or after that date, effective through at least December 31, 2023. Additionally, the IRS warned that the processing of existing claims (those filed prior to September 15, 2023) will continue, but at a slower pace. This moratorium is a reaction to an increase in fraudulent claims promoted by ERC mills, particularly under unsupported claims of partial shutdown orders or supply chain disruptions. If you experienced a qualifying reduction in sales or were fully or partially shutdown due to government orders, you are still eligible for and should claim ERC.

New Opportunities with 2021 ERC



Full-Time Employee Limitation

< 100 FTEs

< 500 FTEs

Credit Amount

50% credit on first $10,000 of wages

70% credit on first $10,000 of wages each quarter

Maximum Credit Allowed Per Employee



Decline In Gross Receipts Threshold

50% or greater relative to same quarter in 2019

20% or greater relative to same quarter in 2019 or relative to the prior calendar quarter

What are the Eligibility Requirements for the Employee Retention Tax Credit?



the ERC requires a 50% or greater decline in gross receipts to the comparable quarter in 2019

the ERC requires a 20% or greater decline in gross receipts to the comparable quarter in 2019

Many employers, including not-for-profits, qualify for the ERC.   Eligible employers includes businesses, tax-exempt organizations, and certain self-employed individuals. Eligibility is determined on a quarter-by-quarter basis.  To be eligible the employer has to show they either:

  • Suspended operations fully or partially due to an official COVID-19-related shut down order


  • Experienced a significant decline in gross receipts relative to the same quarter of 2019 (for 2021, the significant decline in gross receipts can also be measured by comparison to the prior calendar quarter

For 2020 and 2021 Employers that received a Paycheck Protection Program (“PPP”) loan may still be able to claim the ERC. (the two benefits cannot be related to the same wages)

employee retention credit

What is the Tax Credit Amount for ERC?

For 2020 you can receive a credit equal to 50% of the first $10,000 of Qualified Wages paid per employee in the aggregate for all eligible quarters. The maximum ERC for all of 2020 is $5,000 per employee.

For 2021, you can receive 70% of the first $10,000 of Qualified Wages paid per employee in each of the first 3 quarters in 2021. The maximum ERC for each quarter is $7,000 per employee. The maximum ERC for 2021 is $21,000 per employee.

The Source Advisors ERC Study Process:

Step 01


  • Gather financial information
  • Confirm the company’s eligibility for the ERC
    • Determine any government or local orders that would have provided for partial or total suspension of operations
    • Review of gross receipt history
    • Assess FTEs
  • Review qualified wages and confirm credit potential

Step 02

Credit Calculation

  • Coordinate with HR on payroll details
  • Use technology-based solutions to summarize impacted employees
  • Confirm FTEs and compute quarterly qualified wage payments
  • Coordinate with CARES Act loan programs and other tax credits to ensure no double-counting
  • Calculate quarterly ERC
  • Assist with the procedural requirements to claim credit

Step 03


  • Document project methodologies and qualifications
  • Assemble final deliverable
  • Audit support included

Source Advisors takes a thorough and comprehensive approach to evaluating and documenting your companies ERC credits. ERC technical leaders are available to help you navigate the nuances of the employee retention tax credit. This assessment is complimentary. We get paid only if your company moves forward in successfully claiming the ERC. Our approach will provide the necessary documentation to properly claim and sustain the ERC credits you are due.