Tips and Important Dates for ERTC

[Julio Gonzalez]

First off, many people ask where the Employee Retention Tax Credit (ERTC) originated from?

The Employee Retention Tax Credit (ERTC) was created as part of the CARES Act. The purpose of it is to incentivize bosses to keep their employees on the payroll even in the midst of the terrible impacts the businesses were feeling from the effects of COVID-19. When the credit originally came out, businesses that had already received a PPP loan were ineligible for the ERTC. However, that has since been removed. The ERTC has played a huge role in small to mid-sized businesses by helping them avoid layoffs. The Employee Retention Tax Credit is a tax benefit that is fully refundable. Companies are able to claim the tax credit equal to 50% of qualified salaries, up to $10,000 of wages per employee between March 12, 2020 and January 1, 2021. This credit has been extended into 2021 in order to provide more financial aid for those companies in need.

We know that we are long past 2021, so why is this still important? Businesses can actually retroactively claim this tax credit through 2025 if they were eligible in 2020 or 2021 but simply did not claim the tax credit. Here are some key dates relative to the ERTC:

• Effective Period: March 12, 2020 - September 20, 2021 (Although some businesses were able to claim the credit through December 31, 2021)
• Retroactive Claims: Can be filed through 2025.
• Filing Deadlines: ERTC are claimed on quarterly employment tax returns. To claim the credit retroactively, your company should file Form 941-X for each quarter with qualified wages. File this form within three years of the original Form 941’s filing date or two years from the date the tax was paid, whichever is later.
• Sunset Date: September 20, 2021 OR December 31, 2021

Tips for ERTC Submission

• Start Now: Give yourself enough time to understand the process and resolve any issues that may arise.
• Assemble the Proper Documentation: This helps not only streamline the filing process but also substantiates your ERTC claim if the IRS were to question it.
• Have Knowledge of the Process: Gain an understanding of the process to help ensure your submission is complete and correct. If you have questions, be sure to seek assistance or clarification.
• Consider Utilizing a Professional: If you have questions or need help, don’t be afraid to reach out to a professional. They can help ensure your submission is prepared correctly and submitted in a timely manner.

Do you have any further questions on the Employee Retention Tax Credit?