The Employee Retention Credit (ERC) is a fully refundable payroll tax credit for employers. It’s worth up to $5,000 per employee in 2020, and up to $21,000 per employee in 2021.
Your school can seek this credit in both 2020 and 2021, even if you obtained a Paycheck Protection Program (PPP) loan, as long as the same wages are not used for both.
If you’re confident you qualify, we can help you avoid mistakes and get your maximum
Employee Retention Credit.
We’ll complete the necessary IRS forms on your behalf – all you have to do is sign and file.
Or better yet, if you’re a MinistryWorks customer, we’ll take care of the filing too!
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If you qualify, you can seek the credit for your part-time, non-clergy staff.
Employers who borrowed PPP funds are also able to seek the ERC. However, any PPP loan proceeds used to cover payroll expenses cannot be included as "eligible wages" to calculate the ERC.
Schools may qualify for the ERC, even if they provided distance learning. Schools that pivoted to online learning often suspended other parts of their normal operations, such as sports activities, choir and band concerts, drama performances, and chapel. Because each school’s circumstances are unique, it’s important to consult with a local attorney.
Ministers and other clergy are exempt from federal payroll taxes (FICA). Since employers pay no Social Security or Medicare taxes on their behalf, clergy may not be counted when calculating the Employee Retention Credit. This includes clergy employed by private schools, if they perform ministerial duties. For more, read about ministers’ dual tax status or IRS Publication 517.
There is no IRS application. You can claim the credit on IRS Form 941. For 2020, you may file an amended return: IRS Form 941-X. MinistryWorks can help you do that.
It’s important to maintain records documenting the factors used to determine your eligibility for the ERC. The IRS recommends keeping these records for four years. Documentation may include accounting records, copies of government restrictions related to COVID-19, and spreadsheets showing the time periods that various activities were suspended or restricted due to mandates.
No. We can help you obtain the ERC, even if you work with a different payroll provider or process payroll in-house.
If MinistryWorks is your payroll provider, we can file the IRS forms needed for you to obtain the credit. If you’re not yet a MinistryWorks client, we'll complete the IRS forms on your behalf. Then, we’ll send them to you to sign and file.
For tax year 2020 credits, MinistryWorks will charge $250 per employee for whom you receive a credit, up to the lesser of $15,000 or 5% of the total credit you receive for all employees. For tax year 2021 credits, MinistryWorks will charge $350 per quarter, per employee for whom you receive a credit, up to the lesser of $15,000 or 5% of the total credit. Client shall pay MinistryWorks an initial payment of $500 toward the Fee upon completion by MinistryWorks of the calculation of Client’s ERC, with the remaining balance of the Fee owed to MinistryWorks being due and payable to MinistryWorks within fifteen (15) days of Client receiving the refund for its ERC from the Internal Revenue Service. The terms and conditions set forth in the MinistryWorks Payroll and Tax Processing Services Agreement previously signed by your ministry apply.
We're here to help. Send an email to erc@ministryworks.com
The information in this article is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. We strongly encourage you to regularly consult with a local attorney as part of your risk management program.
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