calculate your 2023 employee retention credit
Employee Retention Credit Calculator
As a business owner, it’s crucial to take advantage of every opportunity to save on taxes. One such opportunity is the Employee Retention Tax Credit (ERTC), which was introduced by the CARES Act in March 2020 to support employers who retained their employees during the COVID-19 pandemic. In this comprehensive guide, we’ll dive deep into the ERTC and show you how to calculate it to maximize your tax savings.
Begin Your ERTC Calculation
Did you know that IRS ERTC documentation explaining how to calculate the Employee Retention Credit is over 800 pages long? if you’d like to calculate the ERTC yourself, you’ll need to refer to IRS resources. For your convenience, we’ve linked them here.
In the event you do not have time to review 800+ pages of IRS tax jargon, we built an Employee Retention Credit calculator that will enable you to estimate your ERTC credit with a high deal of accuracy.
After Dec. 31, 2020, and before July 1, 2021
After June 30, 2021, and before Oct. 1, 2021
After Sept. 30, 2021 and before Jan. 1, 2022
Forms and Instructions
Use the revision date for the relevant tax period:
- Form 941-X Instructions April 2022 Revision
- Form 941 Instructions December 2021 Revision
- Form 941 Instructions 2020 Revisions
- Form 943
- Form 943-X
- Form 944
- Form 944-X
- Form CT-1
- Form CT-1-X Instructions
Why is it important to calculate your Employee Retention Credit?
The benefits of calculating your employee retention credit include:
How to calculate the employee retention credit in 2023?
Calculating the ERTC typically requires the following documents:
This crucial document from the IRS outlines the eligibility criteria for the ERTC program, ensuring that you meet all the requirements to claim the credit.
W-3 from 2019 (or other documents demonstrating headcount):
The purpose of this request is to confirm how many full-time employees you had in 2019. Any of these documents are sufficient: W-3 for 2019 First page of W-2’s for 2019 Packet of all W-2’s for 2019 Report showing FTE count in 2019
Did you use a PEO and don’t have a W3 report? Your PEO will be able to provide you a report showing the number of full-time employees in 2019. You’ll be asked for that report instead of a W3 here.
Form 941’s for all quarters (Q2 2020 to Q3 2021)
Usually 6 Form 941’s are requested. State filings or the annual Form 940.
Payroll Journal from 3/1/20 to 12/31/21
A single payroll report covering all paychecks from 3/1/20 through 12/31/21.
This report should show the breakout of each paycheck for each employee.
This report should NOT summarize wages by employee across the entire date range.
This report should NOT summarize wages by paycode/deduction/contribution for all employees.
Every payroll provider calls these reports something different. Examples are: ”Check History”, ”Payroll Detail”, ”Earnings Record”, ”Payroll Journal”, ”Payroll Register”.
Determining the ERTC Credit Itself
The ERTC calculation process is as follows:
Determine the number of employees you had on staff in both 2020 and 2021, including both full-time and part-time employees who received paychecks during each calendar year. Note that having zero employees means you are ineligible for the ERTC, but you may still qualify for paid leave credits.
Identify any periods of partial or full suspension that your business experienced during the eligible quarters of 2020 and 2021. These suspensions must have been mandated by an authority such as a governmental order or directive to qualify for the ERTC.
Do the math. To calculate the ERTC, you must compare your business revenue quarterly. For the 2020 refund, you must show a significant decline in revenue of 50% or more compared to the same quarter in 2019. In 2021, the revenue loss must be 20% or more as compared to the same quarter in 2020.
Calculate the employee wages you paid during any suspension periods. This calculation should include health insurance costs and salaries or hourly wages paid to all part-time and full-time employees during eligible periods in both 2020 and 2021.
You can calculate your ERTC Refund range
Click the button below to jump to the calculator.
Common Questions People Ask About Employee Retention Credit Calculation
Q: How is the retention tax credit calculated?
The employee retention tax credit is an option for businesses that have been affected by the pandemic. This credit is calculated based on a few key factors, such as lost revenue, the number of employees retained, and mandated closures. To determine if you are eligible for this credit, visit the calculator.