With the threat of an unprecedented U.S. government default, business owners were understandably concerned that ERTC (the Employee Retention Tax Credit) would end. However, with the signing of The Fiscal Responsibility Act of 2023 into law, businesses can be reassured that ERTC is here to stay.
Questions about ERTC? You can download our complete ERTC guide here for free. Or you can take this 2-minute quiz to learn about your ERTC eligibility.
What Is ERTC (Employee Retention Tax Credit)?
ERTC is a refundable tax credit giving businesses up to $26,000 per employee on their payroll. Although more than 30,000 small businesses have claimed over $1 billion in ERCs since 2021, many employers still haven’t checked if they qualify for the Employee Retention Tax Credit. These businesses are missing out on the biggest employer’s tax refund in U.S. history.
The ERTC was designed to incentivize businesses to keep their employees on payroll during the COVID pandemic. Eligible companies can receive as much as $7,000 per employee per quarter for the first three quarters of 2021. This equates to $21,000 per employee. Your business may also qualify for an additional $5,000 per employee for 2020.
Eligible employers can claim the ERTC retroactively by filing Form 941-X for each quarter they paid qualifying wages. They can file this form up to three years after the original payroll taxes were due. Therefore, employers can claim the 2020 ERTC until April 15, 2024, and the 2021 ERTC until April 15, 2025. Or you can contact Asure to do the work for you to claim the funds owed to your business.
Who Qualifies for ERTC?
To qualify for the ERTC, employers of businesses and nonprofits of any size must meet one of the criteria below:
The company was partially suspended or closed during the pandemic.
The employer lost a lot of money compared to before the pandemic.
If government orders prevented you from meeting with customers or if curfews, shutdowns, supply chain disruptions, and social distancing hampered your business, you may qualify. If your gross receipts saw a pandemic-related decline of at least 50% for 2020 (and 20% for 2021), you might also be eligible.
ERTC and the Act
ERTC, as a payroll tax credit, falls within the category of entitlements or tax credits provided for in the specified laws. The Congressional Budget Office (CBO) confirmed that the Act would not affect the government’s authority to incur obligations for these programs, indicating that the ERTC would remain unaffected.
ERTC is a significant opportunity for business owners to get financial help from the government. While the IRS discontinued the credit at the end of 2021, employers can still file for the period of March 2020 to September 2021. Take this 2-minute quiz to learn about your ERTC eligibility.
NOTHING IN THIS COMMUNICATION CONSTITUTES LEGAL OR TAX ADVICE OR A GUARANTEE OF ELIGIBILITY FOR AN EMPLOYEE RETENTION TAX CREDIT. ELIGIBILITY DETERMINATIONS RELATED TO THE EMPLOYEE TAX RETENTION CREDIT ARE THE RESPONSIBILITY OF THE EMPLOYER.