Employee Retention Credit Calculator – AICPA
The Employee Retention Credit (ERC) is a refundable tax credit designed to encourage businesses to keep employees on their payroll during periods of significant disruption or closure due to COVID-19. Understanding and calculating the ERC is crucial for businesses to maximize their cash flow and financial stability.
- Enter the total wages, salaries, and compensation paid to all employees during the retention period.
- Enter the number of employees who received wages, salaries, or compensation during the retention period.
- Select the retention period (6, 9, or 12 months).
- Click ‘Calculate’ to see your ERC and a visual representation of your results.
The ERC is calculated as follows:
ERC = (Wages * ERC Rate) * (Number of Employees / 100)
The ERC rate is 50% for 2020 and 65% for 2021.
| Year | ERC Rate | Wage Limit per Employee | Total Limit per Employee |
|---|---|---|---|
| 2020 | 50% | $10,000 | $5,000 |
| 2021 | 65% | $10,000 | $6,500 |
- Consult with a tax professional to ensure accurate calculation and compliance.
- Keep detailed records of wages, salaries, and compensation paid to employees.
- Regularly review and update your calculations as new information becomes available.
What if my business was not in operation during the retention period?
You are not eligible for the ERC.
Can I claim the ERC if I received a Paycheck Protection Program (PPP) loan?
Yes, but the wages used to calculate the ERC cannot be the same as those used to calculate PPP loan forgiveness.
For more information, see the IRS Employee Retention Credit page and the AICPA Employee Retention Credit Resource Center.