ERTC for Non-Profit Businesses & Organizations

The Employee Retention Tax Credit (ERTC) is a tax credit that provides financial assistance to businesses impacted by the COVID-19 pandemic. Non-profit organizations, including charities and religious organizations, are eligible to claim the ERTC if they meet the eligibility criteria. In this article, we’ll explore how non-profits can take advantage of the ERTC.

What is the ERTC for Non-Profits?

There have been a lot of questions regarding whether or not non-profit entities can claim Employee Retention Tax Credit. In fact, it’s one of the top ERTC FAQs. The answer is yes, non-profit organizations can claim the ERTC if they meet the eligibility criteria. This criteria happens to be the same for non-profit organizations as well as for-profit businesses. The first matter that a business or organization should determine for ERTC eligibility is whether they have experienced either a full or partial suspension of its operations due to government orders related to COVID-19 or a significant decline in gross receipts. A significant decline in gross receipts is defined as a decline of 20% or more compared to the same quarter in the previous year.

Qualified wages for non-profit organizations include wages paid to employees, including clergy and other religious professionals, during the eligibility period. Non-profit organizations can also include health plan expenses paid on behalf of each employee in their calculation of qualified wages. The ERTC is equal to 50% of qualified wages paid between March 13th and December 31, 2020 and 70% between Jan 1st and Dec 31st, 2021. Qualified businesses can receive up to a maximum of $26,000 per employee.

How to Claim the ERTC for Non-Profits?

To claim the ERTC for non-profit organizations, they must file IRS Form 941-x, the employer’s quarterly federal tax return. The credit is claimed on Line 11c of Form 941. If a non-profit organization has already filed Form 941-x for the relevant quarter, they can file an amended return to claim the ERTC. Alternatively, non-profit organizations can use Form 7200, Advance Payment of Employer Credits Due to COVID-19, to request an advance payment of the ERTC.

It’s important to keep detailed records of the ERTC claim, including the amount of qualified wages paid to each employee and any other relevant information. Non-profit organizations should also retain all supporting documentation in case of an IRS audit.

Maximizing ERTC Benefits for Non-Profits

To maximize ERTC benefits of for non-profit organizations, there are several steps they can take:

1. Understand the Eligibility Criteria: Non-profit organizations need to understand the eligibility criteria for the ERTC. This includes determining if government orders for COVID resulted in part-time or full-time suspension of business or a significant decline in sales.
2. Calculate Qualified Wages: Non-profit organizations should accurately calculate their qualified wages. This involves calculating the wages paid to each employee during the eligibility period and including health plan expenses paid on behalf of each employee.
3. Claim the ERTC: Non-profit organizations should file the appropriate forms with the IRS to claim the ERTC. This includes filing Form 941 or Form 7200 and keeping detailed records of their ERTC claim.
4. Seek Professional Advice: Non-profit organizations should seek professional advice from an ERTC accountant to ensure they are claiming the ERTC correctly. This can help them navigate the eligibility criteria and application process and ensure they receive the maximum benefits available.

Conclusion

The federal government created the Employee Retention Tax Credit to help businesses and organizations that were negatively affected by the pandemic in 2020 and 2021.

Non-profit organizations impacted by the COVID-19 pandemic can claim the ERTC to receive financial assistance to help them retain employees. By understanding the eligibility criteria, calculating their qualified wages accurately, and filing the appropriate forms with the IRS, non-profit organizations can maximize the benefits of the ERTC. Reading reviews of the best ERTC service companies and then contacting one for professional advice is recommended. This will help non-profit organizations navigate the ERTC application process and ensure they receive the maximum benefits available.