Introduction to the Employee Retention Credit
The Employee Retention Credit (ERC) can provide much-needed relief to businesses impacted by the COVID-19 pandemic. It is a refundable payroll tax credit introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. The ERC aims to help small eligible employers with the cost of keeping staff employed and their wages paid during the hardships of the pandemic.
Understanding the Filing Deadlines for ERC in 2023
Qualified businesses, companies, and employers can still file paperwork and retroactively receive claims for the Employee Retention Credit in 2023, even though the tax credit expired in September 2021. To do so, business owners must file IRS Form 941-X, which is used to make corrections to their originally filed Form 941s. However, this can only be done up to three years after they originally filed their payroll tax returns.
According to the IRS, Forms 941 for a calendar year are considered filed on April 15 of the succeeding year if filed before that date. Therefore, Forms 941-X for eligible quarters in 2020 must be submitted to the Internal Revenue Service by April 15, 2024. Similarly, the ERC deadline to claim ERC funds for eligible quarters in 2021 must be submitted by April 15, 2025.
Upcoming Deadlines to File for the ERC
– Eligible employers who want to claim ERC funds for Q2, Q3, or Q4 in 2020 must submit their 941-X by April 15, 2024.
– Eligible employers who want to claim ERC funds for Q1, Q2, or Q3 in 2021 must submit their 941-X by April 15, 2025.
Eligibility Requirements for the Employee Retention Credit
To receive the tax credit, employers must meet two main eligibility requirements. The first requirement is a significant decline in gross receipts or total revenue without subtracting any costs or expenses. The second requirement is that the business must have been fully or partially suspended due to governmental orders.
For the decline in gross receipts, businesses must have experienced at least a 50% decline in total revenues for quarters in 2020 compared to the same quarters in 2019. For quarters in 2021, the decline must be at least 20% compared to the same quarters in 2019.
For the suspension due to governmental orders, businesses must have either totally or partially suspended operations due to government restrictions on working, travel, commerce, and meetings. Alternatively, there must be at least a 20% decrease in the gross receipts of the business compared to the same calendar quarter in 2019.
How to Calculate the Employee Retention Credit
Calculating the Employee Retention Credit requires determining the decline in gross receipts for a given quarter in 2020 or 2021 compared to the same quarter in 2019. If the gross receipts were below 50% for any calendar quarter in 2020 or less than 80% for any calendar quarter in 2021, the business may be eligible for the credit.
The Employee Retention Credit is a payroll tax credit, which means that eligible employers can receive refunds for taxes already paid. This credit is based on the amount of qualified wages paid and can provide much-needed relief to small businesses and help them keep employees on the payroll.
How to File for the ERC in 2023
To file for the Employee Retention Credit in 2023, eligible employers must determine their eligibility and ensure they meet the IRS qualifications. If eligible, employers can amend previously submitted forms by filing and submitting Form 941-X to retroactively claim the credit. This can be done up to three years after the original tax forms were filed.
How to Track Your ERC in 2023
Tracking your refund for the Employee Retention Credit can be done by calling the IRS, but this can be time-consuming and may have long wait times. As an alternative, StenTam offers a white-glove service where they can call the IRS on behalf of their clients to keep track of their filing. This saves time and provides dedicated customer service.
Conclusion and Next Steps
The Employee Retention Credit has provided significant relief for small businesses during the COVID-19 pandemic. By understanding the 2023 deadlines, eligibility criteria, and how to calculate and file for the credit, small business owners can ensure they claim the credit correctly and receive the financial assistance they need. If additional help is needed, StenTam's experienced tax specialists are available to provide guidance and answer questions. Contact StenTam today to schedule a consultation.By: Tom Kerr
Title: Time is Running Out: The 2023 Deadlines for Claiming the Employee Retention Credit
Sourced From: stentam.com/time-is-running-out-the-2023-deadlines-for-claiming-the-employee-retention-credit/
Published Date: Wed, 09 Aug 2023 13:08:02 +0000