Learn More About The Employee Retention Credit (ERC)

In response to the pandemic's damaging impact on small businesses, the federal government enacted several relief bills. Although the Paycheck Protection Program (PPP) created by the CARES Act's $2 trillion is well-known, few are aware of the Employee Retention Credit (ERC) established by the same Act. If you're a small or medium-sized business owner who retained your full-time or full-time equivalent W-2 employees on the payroll during COVID, you might qualify for a payroll tax refund, which is the ERC. You may be eligible for up to $26,000 per employee if you meet the requirements!

This opportunity is still available, unlike the PPP, which ended in 2021. The ERC is the name given to it, and despite the fact that 70% to 80% of small and medium-sized businesses would be eligible for the refund, many business owners and their accountants are unaware of its existence.

The Employee Retention Credit (ERC) is a tax credit that eligible businesses can receive as a refund. It applies to those who continued to pay their employees during the pandemic shutdown or experienced significant declines in gross receipts between March 13, 2020, and December 31, 2021. Within this timeframe, qualifying employers can claim the ERC on an original or adjusted employment tax return for a specific period.

How Your Business Can Claim The Employee Retention Credit (ERC)

The ERC allows qualifying businesses to claim a significant tax refund for every employee who remained on the payroll throughout the last three quarters of 2020 and the first three quarters of 2021. The ERC can be incredibly generous for those who meet the requirements. Eligible companies may claim a $5,000 tax refund for each employee who worked for them during the last three quarters of the 2020 calendar year.

The benefit for 2021 is even greater. Qualifying businesses are entitled to a $21,000 tax refund for each employee who worked for them during the first three quarters of the 2021 calendar year. This means that your business may be owed a total of $26,000 for each employee who worked during this 18-month period.

To file for the Employee Retention Credit, you must amend two years of previously filed forms with the IRS using form 941-X. To complete this form accurately, you must report PPP info and eligible wages for each quarter of 2020 and 2021 on your federal employment tax returns. Additionally, you must report any qualified sick leave and qualified family leave wages for which you are eligible for a credit under the Families First Coronavirus Response Act (FFCRA).

Many small businesses prefer to seek professional assistance with the ERC refund process to ensure they are adhering to all IRS rules and regulations, which will most likely save them a significant amount of time. To ensure a precise calculation of your ERC tax credit, it is advisable to seek the assistance of a CPA who specializes in the ERC. Furthermore, be sure to file your Employee Retention Credit before the deadline to maximize the benefits of the ERC tax credit. If you have any doubts about your eligibility for the ERC tax credit, it's best to consult an ERC expert for proper guidance. There's no upfront fee for our ERC filing service. Every filing is CPA guaranteed and includes audit support. Contact us today for your free ERC estimate!