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Can I Be Eligible For The ERC As A Church Or Charitable Organization?


As a tax-exempt or charitable employer, you may be wondering if you are eligible for the Employee Retention Credit (ERC). The good news is you may indeed be eligible and can potentially claim up to $26,000 per employee in tax credits. With the right eligibility requirements for tax-exempt employers, you could realize the benefits of this easy-to-navigate process.


Eligibility For Tax-Exempt Employers

Tax-exempt employers, including charitable organizations, religious institutions, and educational institutions, may be eligible to claim the ERC. There are certain requirements that must be met first.


For example, the employer must have been operating during the COVID-19 pandemic and must have experienced a significant decline in gross receipts OR supply chain disruptions OR impacts of partial shutdowns due to government orders. For revenue reduction, the decline must have been at least 50% in the 2020 in comparison to the same quarters in 2019 or 20% for 2021 quarters as compared to 2019. Supply chain disruptions caused by government orders must have impacted the employer more than nominally. Lastly, full or partial shutdowns, such as cancellation of church services, restrictions in the sizes of gatherings, or other operational impacts, must have created a more than nominal impact on the organization.


Additionally, the employer must have retained employees during the pandemic. All of the wages paid to W-2 employees between the second quarter of 2020 and the third quarter of 2021 may be eligible, depending on if the factors above applied to the company.


How To Apply For The ERC

To claim the ERC, tax-exempt employers must have already filed Form 941, the employer’s quarterly federal tax return, for the applicable quarters. Using the services of DUB Financial, they can then amend this form to claim the ERC and will receive the tax credit as a refundable credit towards their payroll taxes. If the credit exceeds the payroll tax liability, they can receive the excess as a refund.


It’s important to note that employers can only claim the ERC for wages paid after March 12, 2020, and before January 1, 2022. Additionally, there are specific requirements for employers who applied for and took advantage of the federal Paycheck Protection Program (PPP).


Is It Easy To Apply For The ERC?

Applying for the ERC may seem daunting, but it’s a relatively straightforward process that experts like us are well-positioned to lead you through. It’s important for tax-exempt employers to keep accurate records of their payroll and employment practices during the pandemic to support their claim for the ERC. This will make the application process smoother and increase their chances of being approved for the credit.


Conclusion

As a tax-exempt or charitable employer, you may be eligible to claim the Employee Retention Credit and receive tax credits of up to $26,000 per employee. To be eligible, you must have either experienced supply chain disruptions or shutdown impacts caused by government orders or a significant decline in gross receipts during the pandemic. Applying for the ERC involves determining eligibility factors, completing calculations, filling out Form 941X, and claiming the credit on the form. While the process may require some additional documentation, it’s a relatively straightforward process overall when you trust the experts at DUB Financial.


If you believe you may be eligible for the ERC, contact us. We’ve helped hundreds of employers, including many charities and nonprofits, understand the program and navigate the application process successfully. There’s no reason you should miss out on potential tax credits that can help your organization during these challenging times.

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