The Employee Retention Credit (ERC) is a refundable payroll tax credit, paid as a check mailed by the IRS. This credit rewards businesses by refunding up to $26,000 for each W-2 employee they kept on payroll during the pandemic.
The ERC is available to businesses of any size and industry, provided they had fewer than 500 full-time W-2 employees in 2019. To be eligible, the business must have experienced a substantial decline in quarterly revenue or faced operational disruptions or restrictions due to COVID-19 mandates or government orders.
Amid the COVID-19 pandemic, businesses, especially small and medium-sized enterprises, faced financial strains. To address this, Congress enacted the CARES Act on March 27, 2020, which introduced two crucial provisions: the Employee Retention Credit (ERC) and the Paycheck Protection Program (PPP). Even if you took out PPP loans, you can still potentially receive an ERC refund as well.
With over 15 years of experience in the consulting business, Omega has a strong reputation for its accuracy, efficiency, and professionalism. We prioritize due diligence, ensure transparency, and offer an audit protection document to all clients to ensure their businesses comply with official ERC requirements. Our goal is to maximize your ERC refund while adhering to all legal regulations.
The Employee Retention Credit is a pandemic tax credit. To apply, businesses need to file a payroll tax amendment by submitting IRS Form 941-X for every quarter that they retained employees in 2020 and 2021. Many companies are eligible to receive up to $5,000 for each employee in 2020 and up to $7,000 per employee for the first three quarters of 2021 (up to $21,000). In total, your business may be able to receive up to $26,000 per employee kept on payroll throughout those two years.
No, there are no legal requirements regarding how you spend your ERC refund check.
The ERC is neither a loan nor a grant. It's a tax credit sent as a check directly from the IRS which does not need to be paid back.
Your ERC refund does count as taxable income — it’s just like any other income for your business. You will have to pay business income taxes on your ERC refund check at the end of the quarter.
Due to a backlog at the Internal Revenue Service (IRS), it typically takes about six to nine months to receive the ERC refund check.
You can apply for the ERC until April 25th, 2025 by submitting an amended payroll tax return claiming the Employee Retention Credit for the specific quarters in which your company qualifies. However, you must file your amended 941-X tax return within three years of the date you filed your original 941 payroll tax document. This means that waiting longer to file will result in a smaller credit refund.
You can call the IRS and check on the status of your refund. They would provide a general update if they received the form. However, the IRS generally has long hold times due to a shortage of phone operators.
Yes, you can still claim the ERC if your business never fully shut down due to government mandates.
Yes, you can still claim the ERC if your business did well during the pandemic. In fact, you can qualify for the ERC even if your business grew during this time.
Yes, your business can receive an ERC tax refund despite receiving Paycheck Protection Program (PPP) funds in the past. The money you received for PPP will be taken into account when calculating your ERC refund.
Yes, you can receive ERC funds if you are self-employed, but only for wages that you paid your employees during 2020 and 2021.
Yes, startup businesses founded in 2021 and earlier can qualify for the ERC through the Recovery Startup Credit. This gives new businesses the opportunity to receive government assistance funds, however, the means to qualify are different and the credit amounts vary.
The ERC is a refundable payroll tax credit, paid as a check mailed by the IRS. This credit rewards businesses by refunding up to $26,000 for each W-2 employee they kept on payroll during the pandemic.
Businesses of all sizes across almost every industry, including startups, nonprofits, corporations, LLCs, and small businesses can qualify for Employee Retention Credit. The rules for 2020 differ from 2021. The ERC tax credit is complicated and the IRS follows strict regulations to determine who can qualify.
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You can apply for the ERC until the end of September 2024 by submitting an amended payroll tax return claiming the Employee Retention Credit for the specific quarters in which your company qualifies. However, you must file your amended 941-X tax return within three years of the date you filed your original 941 payroll tax document. This means that waiting longer to file will result in a smaller credit refund as older quarters become ineligible to file for.
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