You would think ADP should!

Seems like IRS Notice 2021-20 makes it clear via the aggregation rules.

It seems that if you take a credit for a recovery startup you can claim $7,000 per employee/quarter (70% of their first $10,000 in wages). But if you take the credit because you had a decline in gross receipts below 80% of what you made in 2019 for the same quarter, then you can only claim $5,000 per employee/quarter.

Is that correct?

My business qualifies both ways (we made less than 80% in Q4 2021 than we did Q4 2019) and I also opened a separate business (which has no employees yet, but under the aggregation rules it seems that qualifies me to take a credit for employees from my first business).

Does it matter which route companies take to claim the credit (startup recovery vs. decline in gross receipts)?

Thanks Stephen!

That IRS Notice 2021-49 (link at bottom of blog post) gives the details for the recovery startup business credit.

BTW, the actual statute (the tax law) appears here: https://www.law.cornell.edu/uscode/text/26/3134

P.S. ADP should know this. 🙁

Great content as always. My question is in regards to your other post, but I can’t seem to comment on that one https://evergreensmallbusiness.com/tax-strategy-tuesday-startup-business-employee-retention-credit/

I started a second business in 2021. Based on your post, it seems that I should be able to take a retention credit in Q4 2021 on the employees from my original (first) business. Which would be wonderful.

But, my payroll company (ADP) can’t find IRS language that supports this. I couldn’t either.

Would you be kind enough to share where/how you came to this interpretation?