What Are Key Things Business Owners Should Know About the ERTC?

October 12, 2023
Dayes Law Firm

If you haven’t yet applied for the Employee Retention Tax Credit, also known as the ERTC or ERC, there are a few crucial points about the program you should know before you start your application. These key things every business owner should understand about the ERTC are important to know so your claim doesn’t accidentally set off warning bells to the IRS, which is getting serious about more closely scrutinizing ERTC applications

What to Know About the Employee Retention Tax Credit

The first thing you should know about the ERTC is that many businesses may be qualified to apply for it! It was implemented as an extra incentive for businesses to retain their employees in spite of the financial challenges of the early months of the COVID-19 pandemic, and is a refundable payroll tax credit certain businesses can claim on qualified wages paid to those employees they kept on staff. 

The ERTC was included in the CARES Act – also known as the Coronavirus Aid, Relief, and Economic Security Act – which was passed in March 2020 as a way to help with the financial impact to businesses from COVID-19. Although it was passed a few years ago, you can still claim the credit retroactively by amending your employment tax returns now.

However, the IRS announced an “immediate moratorium” until the end of the year on processing new Employee Retention Tax Credit claims. But you should still consider getting in touch with a trusted tax professional if you think your business might qualify. In fact, even the IRS recommends going this route to make sure you’re making a legitimate ERTC claim for your business. 

ERTC Guidelines 

The ERTC is available to employers that experienced either a full or partial shutdown of operations as a result of government orders related to COVID-19, or if a business experienced a decline in gross receipts in 2020 or 2021 when compared to the same quarter in 2019. 

At first, the ERTC was for eligible wages paid between March 12, 2020, and December 31, 2020. It was later extended through December 31, 2021, but the Infrastructure Investment and Jobs Act eventually changed the dates of the ERTC extension again. 

Thanks to that new legislation, the ERTC then applied to wages paid through September 30, 2021 – except for Recovery Startup Businesses, which are still eligible to claim it for wages paid after June 30, 2021, and before January 1, 2022.

According to the IRS, the credit maximum for the Employee Retention Tax Credit per employee is $7,000 for each employee per quarter in 2021, equaling a potential $21,000 in total. That’s in addition to the maximum credit of $5,000 per employee in 2020, meaning you could potentially claim up to $26,000 per employee.

For all quarters in 2020, the deadline to apply for the ERTC is April 15, 2024. For quarters in 2021, the deadline is April 15, 2025. That gives you limited time to get to work with tax professionals if you want assistance applying for the tax credit. 

How Dayes Law Firm Can Help 

At Dayes Law Firm, our team and our partner firms have helped numerous businesses file for millions in ERTC refunds already. Let us prove to you we are the right choice to partner with on ERTC applications by contacting us for a free, no-obligation consultation, and we can get you started with the process. 

Call (800) 503-2000 to get in touch with a member of our team today!