ERC FAQs: Common Employee Retention Tax Credit Questions
February 24, 2023
If you’re a small business owner, you may already know the answers to some of the most frequently asked questions about the Employee Retention Credit, a tax credit also known as the ERC or ERTC. But the qualification and application process for the ERC can be confusing, so we decided to cover just a few ERC FAQs that will hopefully help more business owners who do qualify feel confident in pursuing this important credit.
What is the ERC?
The ERC is a refundable payroll tax credit businesses can claim on qualified wages paid to their employees if they retained staff in the face of significant setbacks during the height of the COVID-19 pandemic in 2020 and 2021.
What tax filings are eligible for the ERC?
Quarterly payroll tax filings from 2020 and 2021 qualify for the ERC. However, there is still a chance you and your business may be eligible to claim this credit retroactively if you apply before the upcoming deadlines.
Does my business qualify for the ERC?
A business can qualify for the ERTC/ERC in a few different ways, including if the business experienced a decline in gross receipts in 2020 or 2021 as compared to the same quarter in 2019, or if the business experienced a full or partial suspension of business operations due to government order. But a skilled professional like the team at Phillips Law Group can help you best determine if your business qualifies.
Can I still apply for the ERC?
There is still a chance to retroactively claim the ERC if you did not previously claim the credit for the years 2020 and 2021, but the application window is slowly closing. The two deadlines for claiming the ERC in 2023 are:
- For all quarters in 2020, the deadline to apply for the ERC is April 15, 2024.
- For all quarters in 2021, the deadline is April 15, 2025.
Does the Employee Retention Credit have to be paid back?
No! The ERC is a fully refundable tax credit eligible employers can claim against certain employment taxes. In other words – it is not a government loan, and does not need to be paid back.
How do I apply for the ERC?
One of the main ERC FAQs we are asked is how to apply for the credit, and the only way to do so now is to file an amended Form 941X (Quarterly Federal Payroll Tax Return) for past quarters in which a business was an eligible employer. If you’re unsure if that applies to your business, that’s where the tax professionals at our firm can step in to help.
The Phillips Law Group team can focus on the ERC application process for you while you focus on your business, and you can be sure we will work to give your business the best chance at getting the highest potential tax credit refund.
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