How Can Pro Tax Advisors Help Businesses Optimize the ERTC?

October 20, 2023
Dayes Law Firm

The Employee Retention Tax Credit (ERTC) is a COVID-19 relief measure the government provided to help businesses continue running in 2020 and 2021. This tax credit gave employers what they needed to keep employees on their payrolls. Now, employers can file retroactively to collect a refund for the qualifying wages they paid at that time.

However, the process of claiming the ERTC can be complicated. ERTC tax attorneys can help. As a business owner, you already have so much on your plate. You might not have the time to research this new tax credit, as it’s already seen many modifications. Let a tax law firm handle it while you focus on what matters most: your business. 

Five Ways Professional Tax Advisors Assist Businesses in the Use of the ERTC

Hiring a professional tax advisor is beneficial in several ways, especially when it comes to the ERTC.

Avoiding Scams

Unfortunately, some people are using the ERTC as an opportunity to take advantage of small businesses. These scammers claim to be tax representatives or lawyers and will charge exorbitant fees or even commit fraud. 

If you claim the ERTC incorrectly, you could face penalties and repayment requirements. Look out for law firms making excessive promises, such as collecting up to $26,000 per employee. The three main types of ERTC scams include: 

  • Phone call scams
  • Collection scams
  • Identity theft scams

The right ERTC tax attorneys will help you avoid these scams.

Determine Eligibility

It can be difficult to determine your eligibility for the ERTC because of the many modifications the government has made. For example, in 2020, businesses that already claimed Payment Protection Program (PPP) loans couldn’t claim the ERTC. In 2021, the Consolidated Appropriations Act amended this, allowing businesses to claim both as long as they didn’t “double-dip.” 

To be an eligible employer, you must have shut down business operations in response to governmental orders or seen a significant decline in gross receipts. The gross receipts test requires you to have seen a 50% decline in revenue for 2020 and 20% for 2021. 

Calculating Eligible Wages

Determining which wages qualify for the ERTC is another complex process. A tax advisor’s support will help you accurately calculate your eligible wages for each qualifying quarter. When claiming the ERTC, you can collect 50% of up to $10,000 in wages you paid in 2020 and 70% of the same for 2021. 

Record Keeping

Record keeping is essential in claiming and optimizing your use of the ERTC. Going through old records yourself can be exhausting. A tax advisor can help you organize and maintain your records to file for tax credits like the ERTC. Keeping track of relevant income, payroll, and deduction information is vital. In the case that the IRS audits your claim, you want to be prepared. 

Claiming and Utilizing the ERTC 

Finally, tax advisors will help you file your claim to optimize your ERTC benefits. This process can be long and complex, so having a professional on your side makes a world of difference. To claim the ERTC retroactively, you can file Form 941-X to adjust your payroll taxes. You have until April 2024 to file for the ERTC for 2020 wages and until April 2025 to file for 2021 wages. 

Optimize Your Use of the ERTC With Dayes Law Firm

Here at Dayes Law Firm, we’ve helped hundreds of businesses claim the ERTC. Our ERTC tax attorneys can help you, too. Contact us at 866-567-4510 for a free consultation today.