Can Businesses Claim the ERTC for Non-U.S. Citizens?

September 21, 2023
Dayes Law Firm

Many industries, such as farming, construction, and hospitality, benefit from workers on temporary visas. These workers help fill the gap when it’s tough to find U.S. citizens to work in certain roles. Typically, they have H2-A or H2-B visas that allow them to work in the United States temporarily.

If your trade or business employs non-U.S. citizens, you may wonder whether you can claim the Employee Retention Tax Credit (ERTC). 

What Is the ERTC Program?

In 2020, the government introduced the ERTC program as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This program can help qualifying businesses recover with a generous refundable tax credit.

If your business is eligible, you could claim a credit worth:

  • Up to $5,000 per employee for 2020
  • Up to $7,000 per employee per quarter for 2021

The ERTC program ended in 2021, but you can still claim the credit retroactively.

Can You Claim the Credit for Non-U.S. Citizens?

Understanding the ERTC for visas can be tough. You can claim qualifying wages paid to employees, but what about workers on temporary visas?

According to the IRS, you can only claim the credit for employees for whom you paid payroll taxes. That means if you have workers on H2-A or H2-B visas who only pay taxes in their home countries, you can’t claim the ERTC for them. If you sponsor employees on H1-B visas and pay taxes for them, you may be able to claim the credit for those workers.

Another requirement is that you can only claim the credit for full-time employees (those who work at least 30 hours per week or at least 130 hours per month). Many workers on visas don’t work full-time hours, which would prevent you from claiming wages for them.

How the CARES Act Helps Employers With Workers on a Temporary Visa

Even though you may be unable to claim the ERTC for workers on visas, the CARES Act can benefit businesses that employ non-U.S. citizens. That’s because the CARES Act includes amendments to the H2-B seasonal worker visa program that raised the visa cap in 2021.

These amendments were intended to assist eligible employers and help workers transition back into the workforce. With the visa cap raised, your business may be able to hire more non-U.S. citizens than you could before.

Does Your Business Qualify?

To claim the ERTC, you must have paid qualifying wages to full-time employees (qualifying wages include health insurance costs paid for your workers). However, you can’t claim wages that you paid with Paycheck Protection Program (PPP) loan funds.

You’ll also need to meet at least one of these requirements:

  • Your business suffered a big drop in gross receipts (at least 20% compared to the same calendar quarter of the previous year for 2021 and a drop of at least 50% for 2020)
  • Your business had to partially or fully close down for a while because of a government order

If you’re eligible to claim the credit, you must file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. You can expect to see your credit in about six to eight weeks.

Call Our Firm To Learn More About the ERTC

Understanding the ERTC for visas isn’t always straightforward. If you’re unsure whether you can claim the credit for workers on temporary visas, reach out to us at Dayes Law Firm for advice. You can contact us at (866) 567-4510.