How to File for Employee Retention Credit

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The CARES Act created many benefits for employers, including the Employee Retention Credit. This credit gives small and medium-sized businesses up to 50% of the wages paid to employees. The wages must have been paid during the pandemic. The maximum a business can receive is $26,000 per employee, and it’s a grant.

Less than 5% of eligible businesses filed for the ERTC, so here’s what you should know about filing for it.

What is the Employee Retention Credit?

First, let’s talk about the credit before learning how to file for it.

The ERTC is a refundable credit. This means you can claim it even if it exceeds your tax liability. The eligible wage period is from March 12, 2020, to January 1, 2021.

To be eligible, you must prove your business suffered a hardship because of the pandemic, such as:

  • Your business was forced to partially or fully shut down
  • Your business had a gross receipt reduction

Applying for the Employee Retention Credit

Employers must file IRS Form 941-X, the Adjusted Employer’s Quarterly Federal Tax Return, or Claim for Refund. This must be completed with your quarterly tax return.

The original due date was 9/30/21, but businesses can file retroactively if your business meets the requirements.

The credit is only good on qualifying employees’ wages. Qualified wages are those paid to employees between March 12, 2020, and January 1, 2021. Any wages paid to employees during that time IF your business had a hardship qualifies.

Paying Back the ERTC

Here’s the good news – you don’t have to pay back the Employee Retention Tax Credit. Instead, it’s a refund of expenses you already paid. You can receive up to $26,000 per eligible employee.

Remember, though; it can take between 6 – 10 months to receive your refund.

Final Thoughts

If you didn’t file for the Employee Retention Tax Credit, it’s not too late. Contact me today to discuss your eligibility for the credit, and let me help you get back the money you’re owed.