How Does a Business Report Tax Returns to Claim the ERC?

September 11, 2023
Dayes Law Firm

Applying for the Employee Retention Credit, also known as the ERC or ERTC, is more complex than selecting a box on a form and being done with it. Because the tax credit involves previous quarters, business owners who qualify for it and who have already turned in their previous tax returns will need to retroactively claim the ERC with amended tax forms. 

Claiming the Employee Retention Credit involves amending a previous return after compiling documentation for the credit – and employers may want to consider having an ERC specialist team help with the detailed process. 

How to Amend Payroll Tax Returns to Claim the ERC

Because businesses use Form 941 to report payroll tax information, it stands to reason that you’d need to turn in an amended version of that form to claim the ERC. 

Claiming the Employee Retention Credit is not the only reason a business owner may submit a Form 941-X, of course. If you made a mistake, such as overreporting or underreporting certain numbers, on your original Form 941, you could use Form 941-X to amend the original filing to correct the error. 

But those forms can be used to claim credits retroactively such as the ERC as well. If your business qualifies, you can still claim the tax credit for 2020 and 2021, although deadlines to do so are approaching quickly. 

If your business had to partially or fully suspend operations because of a government order during qualifying quarters in 2020 and 2021, or if it lost at least 50 percent in gross receipts in 2020 and 20 percent in 2021 when compared to the same quarter in 2019, it might be eligible to claim the ERC via an amended payroll tax return. If you kept employees on payroll even during those tough economic times, you’ve earned those ERC funds and deserve to claim them for your business. 

Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, is what you’d use to claim the ERC retroactively. After compiling your original Form 941 documents and the documentation needed to prove your business’s eligibility for the ERC, you can apply to claim the credit. 

There is some complexity involved in claiming the ERC and proving that you’re qualified to do so. You’ll need to provide calculations for qualified employee wages, for instance, and be able to compare the corrected amount to the amount you originally reported. The IRS will expect detailed information regarding why you need to make corrections and claim the Employee Retention Credit, and you’ll have to be able to back up your explanation with facts and figures.

Amended Payroll Tax Return Assistance for ERC Claims

That’s one of many reasons you might want to consider working with a team of skilled tax professionals to amend payroll tax returns and claim the ERC. They can help ensure you’re making your claim as correctly and accurately as possible and help you with all of the information the IRS requires to turn in an amended tax return. 

You will need to submit this information and your amended Form 941-X by upcoming ERC deadlines to get your refund. For all quarters in 2020, the deadline to apply for the ERC is April 15, 2024, and for all quarters in 2021, the deadline is April 15, 2025.

That doesn’t leave you a lot of time to gather your documentation and make corrections when you’ve also got a business to run, but an ERC tax professional can help. At Dayes Law Firm, our experienced legal professionals have already helped many businesses file for millions in ERC refunds so far, and we can assist you, too. 

Please contact us today for a free consultation to talk through any of your Employee Retention Credit questions or concerns. We can offer you a no-obligation evaluation at no cost to you. Our team of knowledgeable tax attorneys is ready to help you claim the tax incentives your business is entitled to, including the ERC. Please give us a call to learn more!