What Are the Step-by-Step Instructions for Claiming the ERC?

October 4, 2023
Dayes Law Firm

For business owners who haven’t managed to get around to doing it yet, claiming the Employee Retention Tax Credit – also referred to as the ERC or ERTC – may seem like a daunting task. Anything involving additional tax work might seem like just another item to add to an ever-growing list of things to get done for your business. 

Dayes Law Firm has put together a list of step-by-step instructions for claiming the ERC. But if you don’t want to go it alone, we also have a team of tax professionals who would be more than happy to assist you – just as we’ve already assisted hundreds of businesses in filing for over $250 million in ERC tax credit claims so far.

Claiming the ERC – Step One

The first step in claiming the Employee Retention Credit is determining eligibility

To qualify for the ERC in 2020, your business needs to have experienced what the IRS calls a “significant decline” in gross receipts compared with the same calendar quarter in 2019 – indicating a 50 percent or greater drop in your gross receipts. For 2021, your gross receipts must be 80 percent or less compared to your receipts for the same quarter in 2019.

Your business may also be eligible to claim the ERC if it needed to partly or fully suspend operations because of government orders related to COVID-19. An ERTC team, like the tax professionals at Dayes Law Firm, can help you determine how and why you might qualify under these conditions. 

Claiming the ERC – Step Two

Next, you’ll need to calculate your qualified wages for the ERC. For 2020, the tax credit is equal to 50 percent of qualified wages that employers paid to their employees in a calendar quarter, and qualified employers can potentially get a maximum credit of $5,000 per employee.

Then, for 2021, the tax credit is equal to 70 percent of qualified wages that employers paid their employees, with qualified employers possibly earning a maximum credit of $7,000 per employee per quarter. Working all this out can help you determine how much your business might get in an ERC refund. 

Claiming the ERC – Step Three

The next step to claim the ERC is gathering documentation to prove your claim. You’ll need any applicable 941 payroll tax forms, potentially Profit and Loss sheets for each quarter of 2019, 2020, and 2021, and any payroll documents for 2020 and 2021 (including monthly healthcare statements). 

If you applied for a Payroll Protection Program loan, you might also need to produce PPP loan documents. That might include a forgiveness application, if applicable. 

Claiming the ERC – Step Four

To claim the Employee Retention Credit, after you’ve determined eligibility and gathered your documentation, you’ll need to file Form 941-X (Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund). 

If you follow all of the IRS instructions on the form, you should be all set once you file. But if you’d like a tax attorney skilled in helping businesses apply for the ERC to look over your information, or want their assistance right from the start, the team at Dayes Law Firm may be able to help.

Call Dayes Law Firm for ERC Assistance 

At Dayes Law Firm, we can work with you to calculate your eligibility for this program and help you with every step of claiming the ERC. 

We have extensive experience in Employee Retention Credit matters and have been involved in filing for more than $250 million in refunds for many businesses to date. In fact, our clients have already received over $25 million in funds for ERC claims.

Please contact us for a free, no-obligation consultation concerning any of your ERC questions or to get assistance in claiming the ERC. We hope to hear from you soon!