One of the most significant changes included in the Consolidated Appropriations Act (CAA), signed into law in December 2020, allows nonprofits that received a Payroll Protection Program (PPP) loan to also claim the Employee Retention Credit (ERTC), though the same wages cannot be used for the credit and loan forgiveness. Prior to the passage of the CAA; nonprofits who obtained PPP loans were not eligible for this credit.
Nonprofits that paid qualified wages between March 12, 2020, and December 31, 2020, and experienced full or partial suspension of their operations or a significant (50%) decline in gross receipts when comparing the gross receipts for the same quarter in the previous year are eligible to claim the ERTC.
The 2020 credit amount equals 50% of qualified wages paid, including qualified health plan expenses, up to $10,000 per employee. The maximum credit available per employee in 2020 is $5,000.
For 2021, the qualifications was amended to be a 20% drop in gross receipts when comparing the first two quarters of 2021 to the same quarter in 2019 and the credit is increased to 70% of qualified wages with a limit of $7,000 for each quarter.