If your business is struggling to recover after the COVID-19 pandemic, you may have heard about a tax credit called the ERTC. Also known as the Employee Retention Credit (ERC), this tax credit provides up to $26,000 for each employee paid in 2020 and 2021.

You still have time to apply for the credit retroactively. Here’s what to know about ERTC filing deadlines, as well as requirements for claiming the credit.

IRS Deadlines for the ERTC

Although the ERTC program ended in September 2021, the IRS allows businesses to apply retroactively. Deadlines depend on the quarter for which you want to claim the credit.

If you’d like to claim 2020 wages paid for the Employee Retention Tax Credit, you have until April 15, 2024 to do so. Businesses that want the credit for 2021 must apply before April 15, 2025. If you miss the deadline, you’ll be unable to claim the credit.

ERTC Processing Delays

Even if you apply for the credit well before ERTC filing deadlines, expect processing delays. On September 14, 2023, the IRS announced an immediate halt to ERTC processing due to the number of fraudulent claims, many of which were encouraged by third-party processors. This will likely cause heavy backlogs going into 2024, which means you may wait several months for your credit to arrive.

The IRS provides some warning tips for avoiding third-party ERTC processing mills. To avoid delays in your claim, stay away from businesses that:

  • Call you with unsolicited advice on claiming the credit
  • Say you qualify for the credit without looking at your tax situation
  • Charge high upfront fees to handle the ERTC application for you

Requirements for the Employee Retention Tax Credit

Eligible businesses can claim wages for the Employee Retention Tax Credit for all quarters of 2020 plus the first three quarters in 2021 (only recovery startup businesses can claim the credit for the last quarter of 2021).

To qualify, you must meet one of these requirements:

  • Your business partially or fully closed because of a government order limiting group meetings, travel, or commerce.
  • You had a large drop in gross receipts (at least 20% compared to the same calendar quarter of the prior year for 2021, and a drop of at least 50% for 2020).

You may also qualify as a recovery startup business. You’ll have to meet all of these requirements:

  • You launched your business on or after February 15, 2020.
  • Your annual revenue for the past three tax years did not exceed $1 million.
  • You have at least one W-2 employee (family members and owner-operators don’t count).

How to Claim the ERTC

If you meet the above requirements, you’ll need to file Form 941-X: Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund with the IRS. You must file a separate form for each quarter that you want to claim the credit and send your form before the ERTC filing deadlines (April 15, 2024 for 2020 and one year after that for 2021).

On your form, list all qualified wages paid to employees, including their health insurance costs. Businesses that claimed Shuttered Venue Operators Grants or Restaurant Revitalization Funds may claim the ERTC as well. However, you may not claim wages paid with these funds. This also applies to wages paid with PPP loans.

Need Help Claiming the ERTC?

At Dayes Law Firm, our attorneys know how confusing the ERTC can seem for business owners. If you need help understanding ERTC filing deadlines or want to know if your business qualifies for the credit, reach out to us at (800) 503-2000 for a free consultation.