If you’re a business owner who’s kept staff on payroll throughout the COVID-19 pandemic, you might be eligible for a significant tax credit. The Employee Retention Credit (ERC) is designed to provide financial relief, and there’s still time to claim it.
Don’t miss out on this opportunity to receive some well-deserved financial support during these challenging times; read on to find out how you can take advantage of this government initiative aimed at encouraging employee retention amid economic uncertainty.
ERC Basics
You’ve still got a chance to understand and take advantage of the ERC, which could significantly lighten your financial burden while helping you retain your valuable staff.
This credit was enacted as part of the CARES Act in 2020 and extended multiple times, most recently by the ARPA in March 2021.
It’s designed to incentivize businesses like yours to keep employees on payroll during these challenging economic times.
For 2021, you can receive up to 70 percent of the first $10,000 of qualified wages per employee each quarter—up from 50 percent in 2020.
Not only does this apply to wages paid from March 13, 2020 through December 31, 2021 but employer-paid health benefits are also considered part of these qualified wages.
Eligible Businesses
Imagine your bustling small business, with its loyal workforce of under 100 full-time employees, qualifying for a significant financial boost through the ERTC because you’ve either faced a government-ordered shutdown or seen your gross receipts plummet by over half during a calendar quarter in 2020 or 2021.
If you’re a larger employer with more than 100 full-timers, only those wages paid while workers weren’t providing services due to COVID-19 circumstances count. But don’t despair! Even tax-exempt organizations and private sector businesses are eligible if they’ve faced restrictions or suffered revenue losses.
Plus, ‘recovery startup’ businesses launched post Feb.15, 2020 can qualify too if their average annual gross receipts don’t exceed $1 million – just bear in mind there’s a quarterly ERTC cap of $50,000.
New Guidance from IRS
Feeling overwhelmed by recent changes? Don’t worry, the IRS has rolled out new guidance to help navigate these modifications smoothly and with clarity. Here’s what you should know:
- The employee retention credit is now extended to eligible employers paying qualified wages between July 1, 2021, and December 31, 2021.
- ‘Recovery startup businesses’ are now classified as eligible employers.
- There’s a revised definition of qualified wages for ‘severely financially distressed employers.’
- Wages counted as payroll costs for shuttered venue or restaurant revitalization grants won’t qualify for this credit.
- Questions regarding full-time employees, treatment of tips, wage deduction disallowance timing, and wages paid to majority owners have been addressed.
Stay informed with this updated knowledge from the IRS!
Claiming the Credit
Ready to get your hands on those vital funds? It’s crucial to start gathering the necessary paperwork for the ERTC and file it with your quarterly Form 941 tax filings as soon as possible.
You’ll need additional payroll data, so make sure you locate all pertinent records from the past few years. If you’re unsure about your eligibility or how to prepare Form 941s, don’t hesitate to reach out to a business solutions provider.
It’s essential not to delay assembling and submitting all required documentation before each quarterly deadline.
Deadline
Don’t forget, you’ve got until April 15, 2024, to submit your Employee Retention Credit (ERC) paperwork for the 2020 tax periods and until April 15, 2025, for the ones from 2021.
This incentive was designed to keep employers afloat during challenging times and encourage them to retain their employees rather than laying them off.
The IRS has provided ample time for businesses to file their ERC claims. However, it’s crucial not to miss these deadlines as late submissions may face penalties or forfeit this valuable credit altogether.
Consider seeking professional help if the process seems complicated or daunting. It’s an opportunity that shouldn’t be overlooked – every dollar claimed is a dollar saved in these uncertain economic times.
Conclusion
Don’t miss out on claiming the Employee Retention Credit. If you’re running an eligible business, this credit could significantly support your financial stability during these challenging times.
The IRS has provided new guidance to help ease the process. But remember, there’s a deadline for claiming this benefit – so don’t delay.
It’s not just about surviving; it’s about maintaining your workforce and contributing to economic recovery.
