Are Schools Eligible for Employee Retention Credit (ERC)?

Key Takeaways

• Schools may be eligible for the Employee Retention Credit (ERC), a significant payroll tax relief measure.

• The ERC provides up to $5,000 per employee in 2020 and up to $21,000 per employee in 2021.

• Eligibility for schools hinges on meeting certain criteria such as government orders affecting operations or experiencing a decline in gross receipts.

• The process for claiming the ERC involves amending payroll tax returns, and deadlines apply.

• Understanding common misconceptions about the ERC can prevent schools from missing out on this valuable credit.

Are Schools Eligible for ERC Refund

Let’s get straight to the point: yes, schools can be eligible for the Employee Retention Credit (ERC), which is a lifeline for many institutions during these challenging times. It’s a substantial benefit that can support schools in retaining their valued staff. But, as with any tax-related matter, there are specific criteria and rules to follow.

The ERC was introduced under the CARES Act and is designed to encourage employers, including educational institutions, to keep employees on their payroll during the COVID-19 pandemic. For 2020, the credit can amount to 50% of qualified wages, capped at $5,000 per employee for the year. For 2021, it’s even more generous, with a cap of $7,000 per employee per quarter, potentially totaling up to $21,000 per employee for the year.

There are a few myths floating around about the ERC that could be causing some schools to miss out on this opportunity. Let’s clear those up:

1. Only ‘for-profit’ schools are eligible: This is not true. Both non-profit and for-profit educational institutions can qualify for the ERC if they meet the eligibility requirements.

2. Having a reduction in students means automatic eligibility: A decrease in enrollment alone does not qualify a school for the ERC. The eligibility is tied to government orders affecting operations or a decline in gross receipts.

3. Schools must be financially struggling to qualify: Financial distress is not a prerequisite for ERC. Schools that have managed well may still qualify based on operational impacts from government orders.

Understanding these points is crucial because they can significantly impact a school’s ability to claim the ERC correctly.

How ERTC Express Helps Schools Maximize ERC Benefits

ERTC Express specializes in assisting schools to navigate the complexities of the ERC. With expertise in tax credits and a deep understanding of the educational sector, we provide a valuable service that can help schools secure much-needed funds.

We start by conducting a thorough analysis of a school’s eligibility, taking into account factors like government orders and changes in gross receipts. Then, we calculate the credit amount, ensuring that all qualifying wages and health expenses are included. Finally, we guide schools through the process of amending their payroll tax filings to claim the credit, ensuring compliance and maximizing the benefit.

Step-By-Step Guide: How ERTC Express Helps Schools Maximize ERC Benefits

Let’s break down the process into clear, actionable steps:

Step 1: ELIGIBILITY
Our team of Account Executives is dedicated to guiding schools through the initial steps of the ERC application process. We meticulously gather all required documentation and remain available to address any questions or provide additional information needed throughout the application phase. Our goal is to ensure your school’s eligibility is thoroughly assessed and supported by the necessary documentation, laying a strong foundation for a successful claim.

Step 2: PROCESSING
Once eligibility is confirmed, our team of CPAs and Customer Success Agents takes immediate action to process your school’s filing. Understanding the unique needs and circumstances of educational institutions, we apply our “Power of 3” system to safeguard against audits and strengthen the defensibility of your claim. This robust strategy involves the collaboration of three separate CPA teams, each validating the final credit amount before submission. This ensures an accurate, compliant, and maximized claim tailored to your school’s specific needs.

Step 3: RECEIVE YOUR FUNDS
In alignment with our commitment to your institution’s financial well-being, ERTC Express operates on a success-based billing model. You will only be invoiced once your school has received the ERC funds. This policy reinforces our dedication to working in your best interest, ensuring that our services contribute directly to your school’s financial recovery and success.

By following these steps, schools can feel confident that they’re taking advantage of this critical financial support in these unprecedented times.

Get Maximum Schools ERC Refund with ERTC Express

Maximizing your ERC refund is about more than just filling out forms. It’s about understanding the nuances of the legislation and applying them to your school’s unique circumstances. That’s where ERTC Express shines.

• IRS Compliance: ERTC Express is fully committed to compliance with IRS guidelines, ensuring every client’s claim meets the highest standards.

• Trusted by the AICPA: Our recognition by the AICPA underscores our commitment to professional excellence and integrity in our services.

• U.S.-Based CPAs: Our team of specialized U.S.-based CPAs provides expert support and guidance on ERTC filings, offering unmatched expertise.

• Power of Three – Audit Defense: Our “Power of Three” strategy involves three CPA teams verifying each claim’s accuracy, enhancing its defensibility.

• Refund Maximization: We aim to maximize refunds through meticulous, human-expert-driven strategies, often exceeding software estimates by 40-120%.

This approach leaves no stone unturned and gives schools the peace of mind that they’re claiming the maximum amount they’re entitled to.

Frequently Asked Questions (FAQ)

What specific types of disruptions to school operations might make a school eligible for the ERC?
Disruptions can include a wide range of changes such as shifting to virtual learning, canceling or postponing extracurricular activities, and adjusting classroom layouts to comply with social distancing mandates. If these changes were due to government orders related to COVID-19, they could qualify a school for the ERC.

Can schools claim the ERC for all employees, or are there restrictions?
Schools can claim the ERC for full-time employees. However, there are different rules for part-time employees and those who are relatives of the business owner. It’s important to review the specific guidelines or consult with a tax professional to understand which employees qualify.

How can schools ensure compliance when claiming the ERC?
To ensure compliance, schools should maintain accurate records of all qualified wages and health plan expenses. They should also document how their operations were affected by government orders. Working with a service like ERTC Express can help ensure that the claim is prepared accurately and in accordance with IRS guidelines.

If a school already filed their taxes, can they still claim the ERC?
Yes, schools that have already filed their taxes can still claim the ERC by filing an amended payroll tax return. It’s important to act promptly to meet the relevant deadlines for amending returns.

What determines a school’s eligibility for the ERC?
Eligibility for the ERC for schools is primarily determined by whether the school experienced a full or partial suspension of operations due to government orders related to COVID-19 or a significant decline in gross receipts compared to the same quarter in the previous year.