The Employee Retention Tax Credit was initiated in March 2020 to encourage business owners to retain staff during the COVID-19 pandemic. Two years later, we find ourselves in a time of economic instability with increasingly lower profit margins for small businesses. Adding to this burden, the Employee Retention Tax Credit will begin slowly slipping away.
ERC is filed on a company's amended 941, which is filed quarterly. Amendments are not evergreen. They expire. And this means the credit's statute of limitations begins to fall off quarterly once the deadline for an amended return passes. The first quarter that ERC could be claimed was the second quarter of 2020. The deadline for amended returns for that time period is July 21, 2023. Upon that date, business owners will no longer be able to claim for the second quarter of 2020, and so on, as each amendment deadline hits.
For the third quarter of 2021, the last quarter for which most businesses will be eligible, the amended 941 filing deadline is October 31, 2024. This is important to you if you still need to check your liability!
Without going into a ton of legislative background information, the basics of ERC are:
- For 2020 you can get up to $5,000 per eligible employee
- For 2021 you can get up to $7,000 per eligible employee for quarters 1, 2, and 3, maxing out at $21,000 per eligible employee for the year.
Qualifications have changed over the past two years. To simplify them:
- A business must have a significant drop in revenue during 2020 / or, in turn, for the first three quarters of 2021 compared to 2019.
- OR, they had to be operating under government restrictions.
There are specific nuances for individual industries that should be considered by your provider when your benefit calculation is being performed.
Working with an organization with a proven track record and history in the tax incentive field is essential. A reputable organization will always provide your ERC findings in writing, have a history of working with businesses on tax credits, and have the proper insurances if assistance working with the IRS is necessary.
If you have not taken the opportunity to review your business's ERC eligibility, GMG allows you to do so. We've been leading the industry in specialized tax credits for over twenty years. In the past five years, we have developed proprietary software that allows YOU, as the business owner, to review your eligibility privately and without obligation. You may check your business's eligibility for ERC and other tax credits here.
We encourage you to know what your business is entitled to, as it does mean the difference between surviving and thriving in the year to come!
Get the help your business needs!
Up to $5,000 for Every Employee You had 2017-2020
Up to $21,000 for Every Employee You have in 2021
Up to $2,400 for Every Employee You hire
Up to $150,000 for Every Commercial Building You Own