Employee Retention Credit for Farmers

January 11, 2023
Written by Peter Anderson

The Employee Retention Credit (ERC) is a federal program that provides certain employers with tax credits for lost income in 2020 and 2021 because of COVID restrictions. (ERC is still available in 2023) 

Farmers with small business that have between 5 and 500 employees will be eligible for the ERC tax credit in 2023 if they have either:

1. Closed their doors any time between 2020 and 2021, either partially or fully


2. Had a loss of 20% gross receipts in any quarter of 2020 or 2021.

If either of the above are relevant to you, your farm qualifies for the ERC tax credit even if you got the PPP loan. Fill out the form below to find out exactly how much you qualify for and how you can receive your funds.

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Qualified wages

If you own a farm, or have full time employees at your farm, you may be eligible to receive Employee Retention Credits in the year 2020 and 2021. You can claim a credit of 50% on qualified wages you pay to your employees. Those wages include the amount that your employee would have been paid for the same duration during the 30 days before the pandemic.

In the first quarter of 2021, you are entitled to claim a credit of up to $10,000 for every employee. However, you must be able to prove that you have qualified wages in each of the first three quarters of that year.

The total qualified wages must be reported on your quarterly employment tax returns. Your gross receipts for the second quarter of 2020 must be less than $300,000. For the third and fourth quarters, your gross receipts must be less than $125,000.

To qualify, you must have fewer than 100 full-time employees. If you have more than 100 employees, you must calculate and report the qualified wages that each of your full-time employees has received during the qualifying period.

Qualified wages include certain health care expenses and cash compensation for non-related party employees. Payments for a qualified sick wage, paid time off, and a loan for PPP forgiveness are not considered qualified wages.

Employers with more than 100 full-time employees are able to claim a credit of up to 70% of their qualified wages in 2021. The amount of qualified wages is capped at $28,000 for each employee. During the first three quarters of the year, you can also claim a credit of up to $28,000 per employee.

Employers can claim Employee Retention Credits on Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. There is a grace period until December 31, 2023, to claim this credit.

Farmers can also qualify for the Paycheck Protection Program. During this period, farmers can claim credit for all qualified wages that were paid to their employees in the first two quarters of the year.

If you are interested in claiming Employee Retention Credits, you must calculate the qualified wages that your business has earned in each quarter and then multiply them by 50%. 

Qualified overtime hours

If you're a farmer in New York, you may be eligible for a tax credit based on qualified overtime hours. Whether you're a farm business or a sole proprietor, you should be aware of this new tax incentive, which was created to encourage employers to keep employees on the payroll during a recession.

The Employee Retention Credit (ERC) is a tax credit that is available to many different types of businesses during the 2020 and 2021 calendar years. As you might expect, there are a lot of details to cover, but the basic gist of it is that if you qualify, you'll get a credit on your federal tax return.

To be eligible, you must have 100 or fewer full-time employees. In addition, you'll need to have a substantial decline in your gross receipts during the calendar quarter in which the credit is claimed.

If you qualify, you can claim a 50% credit on your qualified wages. That means you can count up to $10,000 in qualified wages for each employee during the first three quarters of the year. For the full year, you'll have a maximum credit of $21,000.

The IRS has a few ways to calculate the employee retention credit. The most simple method is to multiply the number of qualified wages by 50 percent to come up with a per-employee credit. A larger credit is possible if you can qualify each quarter.

If you're not sure if you're eligible for the ERC, you should speak to an accountant or tax specialist. They will be able to give you a clearer picture of the program. And if you qualify, you'll be able to claim a certificate of tax credit.

So, if you're a farmer in New York and you're interested in claiming the ERC, don't hesitate to contact your accountant or tax specialist. You'll have a better chance of claiming it if you have accurate payroll records.

Having a good understanding of the Employee Retention Credit will not only reduce your tax burden, it will also motivate you to continue paying your employees.


If you are a farm or ranch operator, you may have a shot at the illustrious "Employee Retention Credit" or ERC for short. But before you rush off to the taxman's office, it pays to do your homework and learn all you can about the benefits and limitations of this coveted tax break. Luckily, there are numerous resources to help you make the right choice. Among them is a new tax-payer-only database of thousands of businesses that are eligible for the aforementioned reward. For more information, visit the website at the link below. In the interim, consider retaining a specialist to provide the advice you need to keep your business afloat. This will save you time and money, which is a win-win in today's environment.

A good tax consultant can advise you on the best route to take. While you're at it, check out the tax incentive program at the link below for more details. Having a savvy tax professional on your side can help you avoid any embarrassing tax snafus in the future. Ensure that your tax advisor takes the time to get to know you personally, and you'll reap the rewards of a better relationship with your taxman.

New legislation expands use of the ERC

The Employee Retention Credit (ERC) provides a tax credit to eligible employers. This credit is designed to offset payroll taxes. If the ERC is claimed, it may exceed the actual payroll taxes owed. It is also available to certain public entities. Public entities include colleges, medical care providers, and hospices.

The ERC is designed to help businesses recover from a decline in gross receipts. If gross receipts are down 20 percent or more during a quarter, the business can claim a credit. In 2021, the law changed to allow a greater percentage of employers to qualify for the ERC.

There are many questions that remain about the changes in the ERC and how they will be implemented. Most of the guidance has been informal and in the form of IRS FAQs. However, the IRS has recently issued Notice 2021-20 and Notice 2021-23, which provide specific guidance.

The Consolidated Appropriations Act of 2021 contains several provisions pertaining to payroll. One of the most significant is the extension of the employee retention credit until the end of 2021. Employers can claim the ERC on all qualified wages paid before January 1, 2022. Qualified wages are generally wages paid during periods of suspension or decline in gross receipts.

Under the CARES Act, ERC was originally limited to eligible employers who had 100 or fewer full-time employees. With the extension of the credit, employers with more than 100 employees can now claim the credit.

For qualifying wages paid before March 12, 2020, the maximum credit is $10,000 per year or $7,000 per quarter. Additionally, employers who are part of the Paycheck Protection Program (PPP) loan program can now claim the ERC retroactively.

Despite the fact that the federal government has taken steps to ensure the continuation of the ERC, businesses should not overlook the opportunity it offers. They should make sure to consult their payroll specialist to determine if they are eligible.

As with all other tax credits, employers should pay careful attention to the new rules. Many questions remain unanswered, and more guidance is likely to be provided in the future.