Posted by Jeffrey Feingold on 08.09.22

Business owners across all industries could be missing out on potentially tens of thousands of dollars, all from not knowing enough about the Employee Retention Tax Credit (ERTC). Although the eligibility period for the credit was ended retroactively to the end of the third quarter of 2021, the time frame for making a claim under the program will continue for at least three years. This is great news for the many companies across the United States that did in fact qualify for the credit but didn’t know they qualified. There’s still time! Businesses can still claim their tax credits retroactively.

What is the Employee Retention Tax Credit (ERTC)?

The Consolidated Appropriations Act 2021, was signed into law on December 27, 2020. Among many changes and updates to the prior relief legislation for COVID-19, this law clarifies and expands the Employee Retention Tax Credit (ERTC) that was created by the CARES Act established in March of 2020. One of the bigger changes in the law is the Employee Retention Tax Credit (ERTC) is now available for employers who previously received a Paycheck Protection Program(PPP) loan. This change in the law provides significant benefits to employers, helping them during the economic disruptions stemming from the pandemic of COVID-19. The Employee Retention Tax Credit (ERTC), another portion of the CARES Act, was designed to incentivize businesses to keep employees on their payroll during the COVID-19 pandemic.

How Much is the Tax Credit Worth?

For wages paid after March 12, 2020, and before January 1, 2021, the ERTC can be applied to 50% of qualifying wages up to $10,000. Meaning a maximum of $5,000 per employee could be credited back to your company if it qualifies. For wages paid after January 1, 2021, and before October 1, 2021, the ERTC can be applied to 70% of qualifying wages of up to $10,000 per quarter. Meaning companies could receive a maximum of $21,000 per employee through September 30.

Is My Company Eligible?

In 2020, the credit became available to businesses with operations that were either fully or partially suspended by a COVID-19 g3overnmental order during the period the order was in force; or gross receipts are reduced by at least 50% (in other words, the 2020 gross receipts were less than 50% of 2019 gross receipts) for the same quarter in 2019. Beginning January 1, 2021, the credit became available to businesses with operations that were either fully or partially suspended by a COVID-19 governmental order during the period the order was in force; or gross receipts are reduced by at least 20% (in other words, the receipts were less than 80% of gross receipts) for the same quarter in 2019. Businesses that were not in existence in 2019 may use a comparison to 2020 for purposes of the credit.

Changes to Note

The ERTC has gone through several rounds of changes since its initial introduction and over time, the eligibility has been extended. Now businesses may qualify if they have up to 500 full time employees on average, as well as if they are a start-up or a non-profit. Employers who previously received funds through the Paycheck Protection Program (PPP) are also now eligible for ERTC as well, though they were not when the programs were first introduced. The only restriction is that employers may not claim tax credits for wages paid using funds from a PPP loan. Changes to the ERTC program have also included increases to the maximum amount a business can claim. In 2020, rebates could be claimed for up to 50% of employee wages, to a maximum of $5,000 per employee, per quarter. In 2021, the maximum was increased to 70%, or a maximum of $7,000 per employee, per quarter.

Steps to Take if You’re Eligible:

Eligible businesses that have already filed their paperwork for 2020 and/or 2021, can still claim their tax credits retroactively. This can be done by filing a 941-X form to make an amendment or an adjustment to their employer’s Quarterly Federal Tax return or claim for refund, or by contacting an ERTC specialist like Tax Point Advisors. If you believe your company may be eligible for the ERTC, contact Tax Point Advisors to see if you can take advantage of 2020 and 2021 credits. Tax Point Advisors works with taxpayers across the U.S. to determine credit eligibility and can take care of all aspects of the documentation and application process. • Determine and document if the company is an eligible employer • Calculation of credits • Compile all required documentation • Preparation of required forms • Coordination with a taxpayer’s payroll processing company Tax Point Advisors can help you determine whether your business ’activities meet the qualifications by conducting a free assessment. To learn more about tax benefits from the Employee Retention Tax Credit you may call us at (800) 260-4138 nationwide.