Thousands of businesses have already claimed billions of dollars through the Employee Retention Tax Credit. If your company has not claimed the ERC refund yet, there is still some time. While you can still claim the refund in 2023, Congress can also choose to discontinue the ERC tax refund program sooner. There are also a series of deadlines that must be met in order to claim the maximum credit. Hence, it is paramount that the amended return is filed as soon as possible. Delay in filing can cause you to lose tax credits your business is entitled to.

Here’s how:

Your business can retroactively claim an ERC refund check on wages paid during the pandemic by filing the 941-X form for amended tax returns within three years of the date of filing the original 941-X form for that quarter. 

For the year 2020, you can recover up to 50% of the first $10,000 in qualified wages paid to each employee. So, your business can receive up to $5,000 back from the IRS per employee.

For the year 2021, the ERC is more generous. You can recover up to 70% of the first $10,000 in qualified wages paid to each employee per quarter. So, your business can receive up to $7,000 back from the IRS per employee for each of the first three quarters of 2021 (up to $21,000). Total eligible tax credits = $26,000 per employee.

Please bear in mind that you will no longer be able to claim the ERC tax credit for 2020 after April 15, 2024. After this, you can only claim ERC credits for the year 2021. So, the further the delay, the more potential ERC credit is lost. Your last chance to submit the ERC credit is April 15th, 2025, for a maximum return of $21,000 per employee per quarter.

Employee Retention Credit Qualifications

The ERC is applicable to businesses of all sizes across almost every industry. This includes startups, nonprofits, corporations, and LLCs. Even businesses that received other government assistance, such as loans from the Paycheck Protection Program (PPP), can qualify.

The rules for 2020 differ from 2021, however, two primary parameters have to be met by businesses to qualify for the ERC tax credit:

1. Businesses must have employed less than 100 full-time employees in 2020 and less than 500 employees in 2021 to qualify for those years.
2. Businesses must have either faced operational disruption during a calendar quarter based on government orders such as shutdown mandates, work-from-home instructions, limits to customer capacity, etc, or faced a significant loss of revenue during the pandemic.

While the above rules seem very straightforward, there are some clauses within these rules that complicate the process and require a skilled tax analyst for filing.

Next Steps

Businesses will want to consider their ERC eligibility for 2020 and 2021 sooner than later. Consulting a professional for this momentous opportunity who can navigate the eligibility complexities is the right step.

Omega has helped file ERC claims for various businesses in a multitude of industries. We can quickly determine if your business is eligible and will handle the entire process from start to finish, including document collection, financial analysis, calculations, filing of the necessary forms, and provide an audit protection document to back up your ERC claim. Filing for the ERC refund is a complex process, which is why it requires a detailed impact study by an ERC specialist. Leverage the experience of our tax experts who have spent extensive time performing impact analysis on our client's financial claim requests. Our team will help you in maximizing the benefits of ERC services. Contact Omega to find out if your business qualifies for the Employee Retention Credit.

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