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Hi, Esther.
Companies looking to claim the ERC must report their total qualified wages, as well as the related health insurance costs, on their quarterly tax returns (Form 941 for most employers). This refundable credit will be taken against the employer’s share of Social Security tax.
Ahead of receiving the credit, employers may opt to retain the value of employment taxes up to the amount of the ERC, rather than depositing it, without penalty. Eligible employers that have fewer than 500 full-time employees can also request advance payment of the ERC using IRS Form 7200. Employers with more than 500 employees are not able to receive an advanceable ERC.
Though the ERC ended on October 1, 2021, businesses can still file for a retroactive ERC refund by Form 941-X. This form can be used to adjust employment taxes filed within three years of the original return or two years from the date the employer paid the tax. Therefore, eligible companies that did not initially claim their ERC could potentially do so through 2024, depending on when they originally filed or paid their business taxes. Employers should keep in mind that this retroactive refund is only available for the 2020 tax year as well as the first three quarters of the 2021 tax year; the eligibility criteria does not apply for Q4 of 2021 nor the 2022 tax year and beyond.
Talk with a Professional about ERC While the ERC is a great tool to help struggling businesses reduce their tax burden, it is still a tad complicated to take advantage of it. If you believe your company is eligible, you should immediately speak with an expert and potentially your payroll preparer.
You can Click Here to see a list of eligibility factors.
Because the credit size depends on how much you normally pay in Social Security taxes, we can help you determine how much your credit is worth and how much tax should not be paid to the federal government.
You want to make sure you don’t apply the same payroll for both PPP loan forgiveness and the ERC, Esther.
In tomorrow's email, the topic for you is: ERC Summary.
To discuss your eligibility, Esther, CLICK HERE to schedule an appointment.
To Your Success, The HD Group (602) 878-7696
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