Did your business suffer as a result of the COVID-19 pandemic? The Employee Retention Tax Credit (ERTC) aids small businesses with under 100 employees who qualify through one of two categories:

• Gross receipts declined more than 50% in comparison to the following quarter of the previous year
• Qualified wages were paid to employees while the business was either restricted or closed due to government regulations because of COVID-19

If your business qualifies, you could see up to $21,000 per employee by applying for the ERC tax credit. This benefit is available now for qualifying applicants. However, there is a deadline. The sooner you apply for the ERC tax credit, the better. You do not want to wait to receive your tax credit refund or miss the deadline for your qualifying tax year through this recovery program.

2020 Tax Year ERC Applicants

During the 2020 tax year, qualifying applicants can apply if their business was impacted between March 12, 2020 and January 1, 2021. If your business qualifies, you have until April 15, 2024 to apply. But, it is best not to wait to apply for the following reasons:

1. You don’t wait to wait long to receive aid meant to financially help your business
2. The IRS is already experiencing delays that can prolong you receiving your credit

Hiring an ERTC consultant is the best way to ensure that you are amending your 2020 tax return properly. 2020 tax year applicants could receive credit for 50% of qualified wages. Or, $10,000 per employee for the year including certain health care expenses.

2021 Tax Year ERC Applicants

During the 2021 tax year, applicants must apply for each individual calendar quarter that they qualify for, as opposed to the aggregated year. The deadline for applying for the 2021 tax year is April 15, 2025. This is one year after the deadline for the 2020 tax year. However, like the 2020 tax year, it is best not to wait to receive your return.

The maximum per employee that business owners could receive credit for is $7,000 per employee per quarter in 2021. With that much potential credit, hiring an ERTC consultant is the best option. After all, you don't want to make a mistake when filling out your application and filing with the IRS.

Could I Be Rejected from the Employee Retention Tax Credit? 

Your business could be rejected from the ERTC tax credit if you do not qualify under their conditions. Or, if the application is not correctly completed. With an ERTC consultant, they will make sure that you qualify and help you calculate your ERC credit before applying. The IRS is firm on who qualifies under its rules. Thus, so want to be sure that you fall within their criteria before spending time applying.

If you received PPP loans in 2020, you cannot use the same wages used to apply for PPP forgiveness on your ERTC application. Filling out correct information on your application is crucial to avoid rejection from the IRS for the ERTC.

Check Out These Related Posts:

ERC vs WOTC: Which is the Better Option for Employers? What Is Employee Retention Credit (ERC)? A Complete Guide How Do You Know if You Have Back Taxes? How Long Do Negative Items Stay on Your Credit Report?