Among the many measures established by the CARES Act of 2020, you’ll find the Employee Retention Credit (ERC). This credit provides a refundable payroll tax credit to businesses affected by the COVID-19 pandemic.
While established in 2020, the ERC was once again expanded in 2021 to expire on September 30, 2021. While currently expired, qualifying companies can claim this payroll tax credit for up to three years by filing the appropriate amended payroll tax return.
Below, we will guide you through filling out all the required paperwork to ensure your business takes advantage of this payroll tax credit:
If you are a qualifying business that can claim the ERC, you will need to fill out Form 941-X to update the information you did not add to your Form 941.
To qualify, employers must have suffered a drop in gross income because of the COVID-19 pandemic. While titled a “nonrefundable payroll tax credit,” this can be misleading. If your business paid the employer’s part of Social Security tax through federal tax deposits, this is refundable if using Form 941-X to report that.
If you are filing for the ERC for the 2020 fiscal year, the deadline is April 15, 2024. If you are filing for 2021, you have until April 15, 2025.
To obtain a copy of the form, you must go to the IRS website and download it.
Once you have the form, follow these steps:
Once all the "i"s are dotted and "t"s crossed, all that’s left to do is wait for the refund check. While there isn’t a standard timeframe for receiving one, it has been noted that the larger the credit, the longer it seems to take to receive the refund.
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