Written by Melissa Lally, MBA is the founder of Balance & Flow, Inc offering small business finance guidance, accounting & bookkeeping to wellness, health, and energy practitioners and businesses nationwide.
You may have heard about the Employee Retention Tax Credit (ERTC/ERC) and wondered if your business missed an opportunity. If your business is eligible, then you can claim the ERTC credit on Form 941/941-X for 2020 by April 15, 2024 and for 2021 by April 15, 2025.
The Employee Retention Tax Credit (ERTC/ERC) is a 2020 and 2021 pandemic-related tax credit for businesses that continued to pay wages during the COVID-19 pandemic. The maximum tax credit per employee is $5,000 in 2020 and $28,000 in 2021.
Determining eligibility and the qualified wages is complicated. However, it makes sense for a business to commit the time and/or costs into determining eligibility if your business:
*Had W-2 wage employees (other than owner(s) and the owner(s)’ family members)
*Had a reduction in gross receipts in 2020 or 2021 compared to 2019 OR was subject to a mandatory partial or full shutdown
*Had less than 100 employees in 2020 or 500 employees in 2021
This is a hefty refundable tax credit and, if eligible, it is almost always worth the costs associated with determining eligibility, document recording, filing the 941-X, and any necessary tax return amending.
Want to determine your eligibility? Rely on a trusted accountant or CPA who is knowledgeable and experienced in the ERTC. The IRS continues to release warnings about third parties aggressively pushing the ERTC to ineligible businesses with false claims.
Disclaimer: While we hope to provide as accurate results as possible, any information here should not be considered tax, financial, or legal advice. You should speak with your CPA or tax preparer about your unique situation for a more accurate valuation of your tax obligation and any potential savings. This is provided as educational information only to empower you with enough information to begin a conversation with your CPA.