(Newswire.net — October 6, 2023) —
The Employee Retention Credit (ERC) is a refundable federal tax credit that was introduced to encourage employers to retain their employees during the COVID-19 pandemic. Unlike a loan, this credit does not need to be repaid. The ERC was designed to assist businesses in recovering from the economic shutdown in 2020, make up for lost revenue due to the pandemic, and retain employees to continue operations. Although the program officially ended in 2021, businesses can still file to receive funds.
The ERC is available for the tax years 2020 and 2021. For the 2020 tax year, the ERC allowed eligible employers to claim 50% of up to $10,000 in wages paid per employee between March 12, 2020, and December 31, 2020. This means that businesses could receive up to $5,000 per employee. In 2021, the ERC increased to 70% of up to $10,000 in wages paid per employee per quarter for three quarters. This amounted to a potential credit of $7000 per employee.
Many businesses may qualify for the ERC without realizing it. To be eligible, businesses must have experienced a significant decline in gross receipts during 2020 or a general decline in gross receipts during 2021 due to COVID-19. The qualification is determined by comparing gross receipts in the respective quarters of 2020 and 2021 to the corresponding quarters in 2019.
Various types of organizations operating in the US, regardless of size, can qualify for the ERC. This includes nonprofits, colleges and universities, as well as businesses in the hospitality, retail, industrial, real estate, construction, and technology sectors. Additionally, businesses that faced a full or partial suspension by government authorities, disruptions in the supply chain or vendor services, reduced workforce, limited operations, or other significant impacts due to COVID-19 may also be eligible.
To claim the ERC, businesses must have incurred qualifying wages, including cash payments and a portion of employer-provided healthcare costs. Even businesses that received Paycheck Protection Program (PPP) loans may still be eligible for the ERC. The credit amount depends on the number of employees and whether the employer had more or less than 100 or 500 average full-time employees in 2019. In 2023, most businesses can claim the ERC by amending their tax filings. However, it typically takes the IRS 4-10 months to process ERC claims and issue checks.
If businesses are unsure how to navigate the ERC process, they can seek assistance from qualified experts like Credit League. Credit League is a US-based organization that specializes in helping business owners claim the applicable Employee Retention Credit. Their team of attorneys and CPAs can provide information about qualifications, assist with necessary documentation, complete the ERC filing, and maximize the return. They offer one-on-one consultations, confidential document uploads, and payroll and pandemic impact reviews. They also maintain contact with the IRS to address any issues affecting the filing status.
In conclusion, the ERC is a valuable tax credit that businesses can claim to offset the impact of the COVID-19 pandemic. It is important for eligible businesses to explore this opportunity and consider seeking professional assistance to navigate the ERC filing process successfully.
