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Article On Employee Retention Credit (ERC)

by Nathan Zachary
ERC Credit

You can get the claim till 2024.

Seeing this must come as a huge relief to you. Sure, because who wouldn’t be? What person wouldn’t want to make up for the pandemic’s destruction? Until 2024, businesses can undeniably benefit from the ERC credit but cannot use it to cover employee wages. For the record, they can file for ERC retroactively if they choose.

After reading this, you might be interested in learning more about ERC credit. That’s why we’ve come to save the day. Read this article to learn the fundamentals of the Employee Retention Credit program.

The time has come to get going.

What Is Employee Retention Credit 2022?

The Employee Retention Credit is a fully refundable tax credit for employers equivalent to 50% of eligible salaries (including allocable qualified health plan expenditures) paid to employees by Eligible Employers. This Employee Retention Credit applies to eligible salaries earned after March 12, 2020, but before January 1, 2021. The maximum qualifying earnings for any employee for all calendar quarters is $10,000. Hence the maximum credit for an Eligible Employer for qualified wages provided to any employee is $5,000.

Employee Retention Credit Eligibility

In order to determine your eligibility, we’ll need some information from 2019. In 2019, eligibility may be extended to companies with 500 or fewer employees. Each quarterly gross receipts total in 2020 or 2021 must be at least 20% lower than the 2019 total.

There is a possibility of a full refund for companies with fewer than 100 full-time employees. This holds true regardless of whether or not the company is officially operating at the time. In addition, companies with more than 100 employees who have to pay wages to their staff because of COVID-19 conditions are eligible.

 The company must be privately held or a tax-exempt organization to be eligible and face one or more of the following difficulties in 2020 or 2021.

  • Complete or partial closure of activities due to government trade restrictions.
  • 50% or less in gross receipts than the same calendar quarter in 2019.
  • A “recovery startup” with yearly gross sales of $1 million or less and an ERC ceiling of $50,000 launches after February 15, 2020.

If your company recovered from a significant drop in gross receipts but did not claim the credit, you can do so in 2022. Businesses have three years following the program’s expiration date to assess eligibility based on salaries earned after March 12, 2020.

On August 10, 2021, the IRS issued Revenue Procedure 2021-33, which provides employers with a safe harbor. Employers can use this to exclude the amount of:

  • Loan forgiveness under a PPO
  • Grant Amount for Shuttered Venue Operators
  • Grant Amount from the Restaurant Revitalization Fund

These monies are not required to be included in gross revenues for calculating eligibility for ERTC. You must apply for safe harbor protection across all companies.

Employee Retention Credit Deadline

The ERTC will end on March 12th, 2023. Companies have three years after the program ends (on October 1, 2021) to analyze payments paid out between March 12, 2020, and October 1, 2021, to see if their employees are eligible. The Infrastructure Investment and Job Creation Act does not apply to wages paid by a startup company engaged in economic recovery. For such businesses, the original deadline of January 1, 2022, still stands.

If your business is eligible, you can still claim the ERC article even though it has been in effect until October 1, 2021. You could request a retroactive ERTC refund if you missed the deadline for applying for the credit. Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund (Form 941)-X is the form for filing back taxes. Three years after the initial due date, a claim must be submitted.

Is It Still Possible To Apply For The Employee Retention Credit?

Yes. The 2020 ERC’s statute of limitations expires on April 15, 2024. The 2021 ERCs’ statute of limitations expires on April 15, 2025.

How To Claim An ERC Credit In 2022?

This ERC article may have covered a lot for you, but you still need to know many things before filing. So, contact ERC specialists by visiting the website “claimerccredit” if you’re having trouble figuring out whether your company qualifies for the employee retention tax credit in 2022 or if you have questions about filing retroactive or revised reports.

Regarding the CARES Act, the employer retention tax credit, tax counseling, and filing alternatives, they can help and provide answers to your inquiries. Don’t wait to get in touch with them. They’ll ensure you get all the eligible credits for your company.

Employee Retention Credit FAQ

How does the Employee Retention Credit work?

The ERC is a refundable payroll tax credit worth up to $5,000 per employee in 2020 and up to $21,000 per person in 2021.

Are the advantages of the Employee Retention Credit the same for large and small employers?

Small businesses gain more from the ERC system. Specifically, they can include wages given to all employees for the period they are an Eligible Employer. Large companies can only have payments provided to employees for not delivering services.

Is the ERC Credit just available to full-time employees?

No, an employer may include salaries given to part-time and full-time employees in the ERC calculation. The sole restriction on credit computation is that an employer may only compute credits on the first $10,000 of salaries and healthcare expenditures paid to each employee during each credit-generating month.

How long are the ERC eligibility and credit-generating periods?

Eligible employers can claim the ERC for qualifying salaries earned in 2020 and Q1, Q2, and Q3 of 2021.

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