MinistryWorks

Your Ministry's Guide to Claiming
the Employee Retention Credit

The Employee Retention Credit (ERC) is a fully refundable tax credit created by the 2020 CARES Act. Churches, schools, camps, colleges, and other nonprofit ministries are among the employers who may qualify for this credit. The tax credit is worth up to:

  • $5,000 per qualifying employee in 2020.
  • $28,000 per qualifying employee in 2021.*

* The American Rescue Plan Act extended the ERC through December 31, 2021. An employer eligible for the ERC in all four quarters of 2021 could receive up to this amount.

This tax credit cannot be claimed for pastors or clergy, because they are exempt from federal employment taxes (FICA).

 

 

What Are My Next Steps?

Determine if your ministry qualifies for the Employee Retention Credit, and seek this federal tax credit if you are eligible. 

  • Review IRS guidance 
  • Consult legal counsel if you are unsure

 

Ready to seek the tax credit?

If you have spoken to an attorney or are confident
you qualify for the credit, we can help you seek it. 

Select the right option below to get started.

I’m a MinistryWorks client    I do payroll another way

On average, employers using MinistryWorks® have claimed $50,000 in ERC tax credits.*

*Based on tax credits MinistryWorks processed in first quarter 2021.

    PPP Borrowers May Obtain the Credit

    Originally, the CARES Act said Paycheck Protection Program (PPP) borrowers could not claim the ERC. The Consolidated Appropriations Act of 2021 amended the law, allowing employers to seek the ERC retroactively, as long as wages paid with forgiven PPP loan funds are not used to calculate the tax credit. 

    Who is Eligible for the 2020 Credit?

    Ministries must have experienced EITHER of these situations between March 13 and December 31, 2020:

    • Gross receipts declined by at least 50% in any one quarter of 2020, compared to the same quarter in 2019.
    • Operations were at least partially suspended by a federal, state, or local government order limiting commerce, travel, or group meetings, due to the pandemic. 

    Note: Employers who averaged more than 100 full-time employees (30 or more hours per week) in 2019 can seek the credit only for wages they paid to employees who were not working, due to the scenarios above.

    Who is Eligible for the 2021 Credit?

    Ministries must have experienced EITHER of these situations between January 1 and December 31, 2021:

    • Gross receipts declined by at least 20% in any one quarter of 2021, compared to the same quarter in 2019.
    • Operations were at least partially suspended by a federal, state, or local government order limiting commerce, travel, or group meetings, due to the pandemic.

    Note: Employers who averaged more than 500 full-time employees (30 or more hours per week) in 2019 can seek the credit only for wages they paid to employees who were not working, due to the scenarios above.

      IRS Guidance on Eligibility

      Be sure to read the updated guidance from the IRS, paying close attention to the following:

      • Section D: Full or Partial Suspension of Trade or Business Operations (Question 11-22)
      • Section I: Interaction with Paycheck Protection Program (PPP) Loans (Question 49)

      Because each ministry's circumstances are unique, MinistryWorks cannot determine eligibility for the tax credit. This responsibility rests with your ministry. We strongly encourage you to consult a local attorney to ensure that you qualify before claiming the Employee Retention Credit.

      Frequently Asked Questions

      Do clergy qualify?
      Pastors and other clergy are exempt from federal payroll taxes (FICA). Since employers pay no taxes on their behalf, clergy may not be counted when calculating the Employee Retention Credit.

      Can I seek the credit for my part-time staff?
      If you qualify, you can seek the credit for your part-time, non-clergy staff.

      What if I received a PPP loan?
      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.  

      How do I apply for the ERC? Is it too late if we already filed our 2020 taxes?
      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.

      Must I be a MinistryWorks customer to get help obtaining the ERC?
      No. We can help you obtain the ERC, even if you work with a different payroll provider or process payroll in-house.

      Will MinistryWorks seek the ERC credit for me?
      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.

      How much does it cost to have MinistryWorks help us seek the ERC?
      We charge just 5% of the tax credit you receive, up to $7,500 per qualifying year. After an initial $250 fee, you will be billed for the balance after you receive the credit.

      Have another question? 
      We're here to help. Send an email to erc@ministryworks.com 

      Ready to seek the tax credit?

      If you have spoken to an attorney or are confident
      you qualify for the credit, we can help you seek it.

      Select the right option below to get started.

      I’m a MinistryWorks client    I do payroll another way

      On average, employers using MinistryWorks have claimed $50,000 in ERC tax credits.*

      *Based on tax credits MinistryWorks processed in first quarter 2021.