Employee Retention Credit: Michigan Eligibility Info

Are you a business owner in Michigan, who is unsure about whether you qualify for the Employee Retention Credit (ERC)? If so, you’re not alone. Given the financial challenges many companies face. The ERC could be a real financial benefit. This article aims to clarify how the ERC works specifically in the context of Michigan.

Whether you’re in the hospitality industry, a startup, or a non-profit. You should find useful insights here. We can even help guide you through the application process. For further insight. Read below, to discover how you could save, a substantial amount per employee through this credit.

Do I Qualify for ERC in Michigan?

Qualifying for the Employee Retention Credit in Michigan largely mirrors the federal requirements. You must meet one of two conditions:

• A significant decline in gross receipts
• A full or partial shutdown of your business due to government orders

In addition, you must also have:

• At least two W-2 employees during any of the fiscal quarters

For 2020, you needed a 50% reduction in gross receipts in any quarter. To claim up to $5,000 per employee for that year. This threshold was lowered in 2021 to a 20% decline. Making you eligible for up to $7,000 per employee, per quarter. In most regions, you can in fact apply these credits retroactively. So it’s essential to keep abreast of the changing guidelines for optimal benefit. ^{(1, 2)}

Services Available to Help Michigan Businesses Apply for ERC

Navigating the ERC application process can be a maze, but you don’t have to go at it alone. Fundwise simplifies this for you. First, you apply online through their platform. Providing basic information such as; your name, business name, and number of W2 employees. Fundwise then take the time to calculate your potential ERC amount.

The team we work with, which consists of industry experts, attorneys, and CPAs. Files the necessary IRS forms. You receive the funds directly from the IRS, with minimal involvement needed on your end. Fundwise’s fees are competitively priced, based on your successful funding.

How Does the ERC Interact with Other Michigan Tax Credits?

While the Employee Retention Credit (ERC) is federally regulated. Michigan offers additional financial programs that can synergize with the ERC, especially if you’re in the hospitality industry, a startup or a non-profit. Some of the Michigan-specific tax credits and incentives you might consider are;

• Michigan Business Development Program: Particularly beneficial for businesses, including startups, planning new investments and job creation.
• Michigan Community Revitalization Program: Aimed at the hospitality sector, this program provides financial support for revitalizing tourist destinations.
• Michigan Corporate Income Tax (CIT) Credits: Useful for non-profits and other organizations, looking to offset corporate income tax.
• Work Opportunity Tax Credit (WOTC): This federal credit is also applicable in Michigan and can be paired with the ERC. It’s designed to incentivize employers to hire individuals, from certain target groups who face employment barriers.

Like other states, Michigan often updates these programs. Which is why it is crucial to stay current with state announcements, for maximum benefit. This multi-pronged approach, provides various avenues for financial relief and growth. Emphasizing the importance of keeping abreast, of the state’s evolving financial incentive landscape.

*Keep in mind, you are allowed to also claim Michigan Business Development Program, Michigan Corporate Income Tax (CIT) Credits, WOTC etc. On the condition that the wages utilized for determining these payouts. Are not simultaneously used for calculating the Employee Retention Credit (ERC). ⁽³⁾

More Info on Michigan

• Located within the Great Lakes zone. Michigan is a part of the United States’ upper Midwest territory. A flat personal income tax rate of 4.25%, applies to residents across the state.
• Following its 2013 bankruptcy. Detroit has witnessed a notable resurgence, especially in the realm of fintech. With organizations such as Quicken Loans spearheading the turnaround.
• As the base for some of America’s most extensive credit unions, Michigan holds a pivotal role in the country’s credit union scene. ^{(4, 5)}

Conclusion

If you’re a Michigan business owner, who is keen on navigating financial challenges while keeping your workforce intact. The Employee Retention Credit is an avenue worth exploring. With high approval rates and the potential to save up to $26,000 per employee. It’s an opportunity you can’t really afford to miss. And remember, Fundwise’s team is here to help you through every step of the application process.

FAQ

1. What is a Recovery Startup Business?

A Recovery Startup Business, is defined as a business that commenced operations, after February 15, 2020. It also has average annual gross receipts, of $1 million or less. Such businesses cannot qualify under the full or partial suspension, or the significant decline in gross receipts tests.

2. Is the ERC Available for Self-Employed Individuals?

Self-employed individuals cannot claim the ERC for their own wages. However, they are eligible to claim the credit for wages paid to their employees.

For a more thorough FAQ, click here.

Learn more about how the Pennsylvania Employee Retention Credit can benefit employers you may know or associate with. Or, click here to jump back to the homepage.

Last reviewed September 2023