As churches navigate through the challenges brought by the COVID-19 pandemic, many are looking for ways to unlock financial benefits to help sustain their operations. One such benefit that is available to churches is the employee retention credit (ERC). The ERC is a valuable tax credit designed to encourage employers to retain employees amid the economic impact of the pandemic.
Understanding the employee retention credit is essential for churches as it can serve as a lifeline to help offset some of the financial strain they may be facing. Here’s what church leaders need to know about this credit and how it can benefit their organization:
First and foremost, it’s crucial for churches to understand who is eligible to claim the employee retention credit. The ERC is available to employers, including tax-exempt organizations such as churches, that meet certain criteria. To qualify, churches must have experienced either a partial or full suspension of operations due to a government order related to COVID-19 or have experienced a significant decline in gross receipts compared to the same quarter in the previous year.
Once eligibility is established, churches can potentially claim a tax credit of up to $5,000 per employee for wages paid between March 13, 2020, and December 31, 2021. This credit can be a significant financial benefit for churches, as it provides a direct incentive for retaining their employees during these challenging times.
It’s important for churches to note that they cannot claim the employee retention credit if they have also received a Paycheck Protection Program (PPP) loan. However, for churches that did not participate in the PPP program, the ERC presents an opportunity to access financial relief and support staff retention efforts.
To claim the credit, churches must carefully navigate through the complex rules and regulations surrounding the ERC. This may include calculating eligible wages, determining the periods in which the credit can be claimed, and understanding the interaction between the ERC and other COVID-19 relief programs.
Seeking assistance from qualified financial professionals, such as tax advisors or accountants, can be extremely beneficial for churches as they pursue the employee retention credit. These professionals can guide churches through the process of claiming the credit, ensuring compliance with all the necessary requirements, and maximizing the financial benefits available to them.
In conclusion, understanding and leveraging the employee retention credit can provide valuable financial relief for churches as they work to retain their staff and sustain their operations during the ongoing challenges of the COVID-19 pandemic. By navigating through the eligibility criteria, and seeking professional assistance, churches can unlock this financial benefit and provide much-needed support for their organization and their employees.