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July 30, 2023

ERTC For Non-Profit Businesses & Organizations

Navigating the complex world of non-profit tax laws and regulations can seem daunting, but there are programs designed to aid you in this journey. One such program is the Employee Retention Tax Credit (ERTC), a federal initiative that’s been revamped during the pandemic to offer significant financial relief.

If you’re running a non-profit organization, you might be wondering if you’re eligible for ERTC. You may also be curious about who doesn’t qualify for this credit and what makes certain businesses stand out as ideal candidates.

Let’s delve into these topics with a keen eye on detail and comprehensive financial analysis. We’ll ensure that by the end, you’re well-equipped with all necessary information regarding ERTC for Non-Profit Businesses & Organizations – helping your venture navigate through these crucial tax matters effectively and efficiently.

Are non-profits eligible for ERTC?

Yes. Non-profits are eligible for ERTC, they just need to meet the criteria like having shut down operations due to a government order or experiencing a significant drop in gross receipts. It’s like navigating through a maze of regulations but with the potential reward of considerable tax relief at the end.

You might be questioning how your organization can qualify. Let’s break down these requirements:

  • First off, you must have had at least one full-time employee during the eligibility period. This doesn’t mean that all employees should be full-time—just one is enough.
  • Secondly, was your operation fully or partially suspended by governmental orders due to COVID-19 during 2020 or 2021? If yes, then you’re on track.

Now let’s talk about gross receipts – did yours reduce by 50% or more in any quarter of 2020 when compared to that same quarter in 2019? Or perhaps decreased by at least 20% in any quarter of 2021 when compared with the equivalent period from 2019? If so, then your nonprofit may well be eligible for ERTC.

There’s an additional criterion related to size: there’s no limit on employer size for claiming ERTC. However, if you classify as a large employer (more than 100 full-time workers in 2020 or over 500 in 2021), take note! You can only claim wages paid when workers weren’t providing services due to COVID-related reasons.

Despite being exempt from income taxes as a recognized Section 501(c)3 entity, don’t overlook this opportunity because it pertains specifically to payroll taxes which nonprofits do pay. So yes, qualifying nonprofits can definitely benefit from ERTC—it’s time to unravel those complex rules and reap the rewards!

Is ERC available for non-profit organizations?

Absolutely, your charitable institution could potentially benefit from tax credits available under the CARES Act, a rare opportunity to offset employment taxes.

Many nonprofits have been unaware of this possibility and it’s worth noting that there’s still time to claim the Employee Retention Credit (ERC).

You might be wondering how exactly your nonprofit can qualify for this credit. Here are some key points:

  • Eligibility period extends over seven quarters, starting March 13, 2020, and ending on September 30, 2021.
  • You’re considered eligible if you experienced a significant decline in gross receipts during these periods.
  • For 2020 eligibility, you need a decrease of at least 50% compared to the same quarter in 2019.
  • For 2021 eligibility, this requirement drops down to a decline of just 20% compared to the corresponding quarter in 2019.
  • Alternatively, even without such financial declines, if your operations were limited due to government orders relating to COVID-19 restrictions on commerce or gatherings, you could still be entitled.

Diving into CARES Act provisions might seem daunting given its complexity, so seeking advice from tax credit experts would be beneficial. It’s all about understanding your organization’s specific facts and circumstances and deciphering how they align with ERC requirements.

This unique opportunity presented by the ERC not only offers financial relief but also encourages employee retention amid challenging times. Remember though: each case varies, so it’s best practice to consult with professionals who can guide you through the intricate maze of non-profit tax laws and regulations.

Who is not eligible for ERTC?

Feeling confused about who doesn’t qualify for these tax credits? You’re not alone, but it’s important to note that federal, state, and local government entities and self-employed individuals generally can’t claim support under the CARES Act. That is because these types of entities and workers are typically funded by public money or their own income, rather than through business revenues.

This lack of eligibility also extends to any businesses that didn’t experience a significant financial hit in 2020 or 2021 and did not get shutdown at all. The specific numbers to keep in mind here are quite clear-cut: if your business didn’t see a drop in gross receipts of at least 50% during any quarter of 2020 or a decline of 20% or more in 2021, you won’t meet the threshold for claiming this credit.

Businesses that did not have a partial or full suspension of operations due to COVID-19 related governmental orders and didn’t have the eligible revenue drops are also ineligible.

Understanding these exclusions is crucial as you navigate through your organization’s finances. It’s also worth mentioning that there might be some nuance requirements for certain cases which could potentially allow you to claim despite the general rules. Therefore, I advise carefully reviewing your situation against these criteria before deciding whether applying for the Employee Retention Tax Credit (ERTC) would be advantageous.

However, remember that while these restrictions may seem limiting on paper, they’re designed to ensure the funds reach those who need them most – businesses grappling with significant losses due to unprecedented challenges posed by the pandemic.

What businesses qualify for ERTC?

If you own a business that had employees and experienced a significant revenue decline or any shutdown during 2020 and 2021, you would qualify. This also extends to businesses that were started on or after February 15, 2020. However, there are further stipulations.

If the business was starting on or after February 15, 2020, your annual gross receipts should not exceed $1 million for the individual tax years of 2020 and 2021. Additionally, your business must have one or more W2 employees – owner-operators or family members do not count.

Qualification is also based on specific situations like government-ordered shutdowns – partial or full – or major drops in gross receipts. The definition of “major drop” varies depending upon the year; it’s at least a 50% drop in gross receipts compared to the same calendar quarter in 2019 for eligibility in 2020 and at least a 20% decline for eligibility in 2021.

A variety of businesses can qualify including banks, institutions, service businesses, daycare centers and preschools along with restaurants, bars, hotels, and motels. Nonprofits too fit into these qualifying categories making them eligible for ERTC.

So if you’re running an eligible organization experiencing significant revenue drops due to COVID-19 disruptions, make sure to explore ERTC benefits as these could give your organization much-needed financial breathing space during these challenging times. Remember though that understanding non-profit tax laws can be complex, so seek expert guidance when applying to ensure compliance with all regulations.


You’re absolutely eligible for ERTC as a non-profit organization. Don’t miss out on ERC, it’s available to you too!

Remember, specific exclusions apply, so ensure your non-profit isn’t one of those. If you’re running a business that meets the qualifying criteria, don’t hesitate to claim your ERTC.

Stay informed about tax laws and regulations – they’ll guide your financial decisions and reporting practices.

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