What Employers Need to Know About the Employee Retention Tax Credit (ERTC)

As the deadline for tax season draws closer, employers should keep their eyes on the ERTC, especially now that the deadlines are being extended – you could be missing out on serious savings!

What it is:
Under the CARES Act, the ERTC incentivized employers to keep employees on their payroll. A refundable credit, the ERTC was introduced to encourage businesses to retain their employees, despite reductions in revenue and government mandated shut-downs from COVID-19. Depending on how the pandemic affected a business, the credit is 50% of up to $10,000 in wages paid by that business’ employer for 2020, and 70% of up to $10,000 per quarter in 2021. The fourth quarter of 2021 is excluded.

Why it matters:
Businesses can still take advantage of the ERTC by retroactively claiming their  refund from the IRS. In order to claim the refund, the business must determine the ERTC eligible wages and file amended quarterly tax returns. Depending on your business, you can claim credit on wages from until Sept. 30, 2021, or Dec. 31, 2021.

How to know if you qualify:
Qualifying organizations include colleges, universities, hospitals, and most employers following the enactment of the American Rescue Plan Act. The crux of qualification lies on the effects of COVID-19 on your organization. If you’re looking to utilize the ERC tax credit, one of two conditions needs to apply in the calendar quarter:

  • “A trade or business that was fully or partially suspended or had to reduce business hours due to a government order,”
  • “An employer that has a significant decline in gross receipts.”

Dates to watch:
While the deadlines for claiming credit aren’t anytime soon, it’s a good idea to keep your eye on the horizon. Businesses can file an amended tax return and retroactively claim credit up until the year 2024 – and in some cases, 2025. File amended returns for Q2, Q3 and Q4 of 2020 by April 15, 2024; for all 2021 quarters, amended returns can be filed until April 15, 2025.

At PuzzleHR, we’re committed to watching your back. Don’t let COVID-19 take any more from your business, and take advantage of your potential ERC tax credit if you can!

Want to know more?

PuzzleHR Presents “Pieces” Sharing Ideas to Drive Business Growth. This episode features PuzzleHR’s President/COO Chris Timol and Jonathan Boehmer, VP of Client Success as they discuss the Employee Retention Tax Credit (ERTC). Click here to watch




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