How is the ERTC Different from Other Tax Credits?

August 10, 2023
Dayes Law Firm

Even though it first became available in 2020, some lingering questions remain about the Employee Retention Tax Credit (ERTC) from business owners who haven’t yet applied for it. Everything from how it works to how the ERTC is different from other tax credits might be on the minds of busy employers who haven’t had the time to apply for the tax credit – or may not even know that they’re eligible to do so. 

What is the ERTC?

The ERTC, sometimes referred to as the ERC, is a tax credit that certain employers can claim against certain employment taxes and is fully refundable. Eligible employers can claim it for wages paid from March 13, 2020, through December 31, 2021, and there’s still time to apply for the tax credit if you haven’t done so on behalf of your business. 

The ERTC was created as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and was meant to act as a sort of reward for businesses that kept employing W2 staff even as employers underwent major financial setbacks during the height of the COVID-19 pandemic.

If your business experienced fully or partially suspended operations due to government orders during the early months of the pandemic, or if it saw a significant decline in gross receipts between March 2020 and December 2021 when compared to the same quarter in 2019, it may be eligible to claim the ERTC.

How the ERTC Differs from Other Tax Credits

The ERTC differs from other tax credits in a few ways. Of course, to compare it to specific tax credits your business has claimed in the past, your best bet would be to talk to a trusted tax professional about your business’s distinctive needs. If you don’t have one currently, please feel free to call the team at Dayes Law Firm to see how we can help.

For one thing, the Employee Retention Tax Credit isn’t issued as an income tax credit the same way other tax credits may be. Instead, it is refunded as a payment from the IRS. 

This makes sense at this point in time, since you can’t claim the ERTC for 2022 or 2023 tax years. Instead, you’ll need to apply for the credit by retroactively completing Form 941-X, Amended Quarterly Payroll Tax Return.

Speaking of, the ERTC is different from other tax credits because it hasn’t been expanded to continue into this current tax year. It isn’t a credit individuals or businesses count on every single year. 

Other tax credits like the Earned Income Tax Credit (EITC) have been around for many years and should continue to be claimable in the near future. As another example, the Child Tax Credit is still available to claim, although expansion changes implemented during the first years of the COVID-19 pandemic have since gone away. 

How Dayes Law Firm Can Help With the ERTC

The team at Dayes Law Firm can further explain how the ERTC works and how it’s different from other credits your business may have claimed in the past. We can offer assistance with determining eligibility for and applying for the credit as well. 

Please contact us for a free evaluation regarding any of your ERTC questions or concerns. Call Dayes Law Firm at 602-888-2900 or fill out the form on this page to learn more. 

We think we can prove to you why so many businesses have already turned to us for assistance with filing for millions in ERTC refunds to date. Give us a call and see how we can help you, too!