ERTC Tax Credit Refund Basics

The Employee Retention Tax Credit (ERTC) is a valuable tool for businesses that were impacted by the COVID-19 pandemic. This credit was designed to help businesses keep their employees on payroll during difficult economic times. This credit can be claimed as a refundable credit.

Eligible businesses can claim the ERTC for wages paid to employees from March 13, 2020 through December 31, 2021. The maximum amount of this credit is up to $26,000 per W-2 employee.
Businesses that are part of a controlled group or an affiliated service group may be able to claim the ERTC on a consolidated basis. Additionally, businesses that have received a Paycheck Protection Program (PPP) loan may still alsp be eligible for the ERTC, but the qualified wages used to calculate the credit cannot be the same wages used to calculate loan forgiveness.

It is important to note that businesses that have received the ERTC must reduce their deductions for wages by the amount of the credit claimed. However, the credit can be carried back one year and carried forward 20 years.

In order to claim the ERTC, businesses will need to complete Form 941, Employer's Quarterly Federal Tax Return, and file it with the IRS. Additionally, businesses will need to provide documentation to support their claim, such as payroll records and government orders related to their suspension of operations or decline in gross receipts.

Overall, the Employee Retention Tax Credit is a valuable tool for businesses that have been impacted by the COVID-19 pandemic. It can help businesses keep their employees on payroll and offset some of the financial losses that they have incurred. Businesses should carefully review the eligibility requirements and documentation requirements for the credit and consult with a tax professional for more guidance.

We understand that at times text loss can be complicated and/or confusing. It is beneficial to get professional CPA help when applying for this tax credit in order to both stay compliant and maximize the amount received. If you would like help claiming your credit with no upfront retainer fees, please click the link below to visit our CPA partners.