What Tax Planning Strategies Can Businesses Use for the ERTC? 

October 31, 2023
Dayes Law Firm

Has your business claimed the Employee Retention Tax Credit yet? The ERTC is a refundable tax credit that can account for financial hardships your business experienced due to the COVID-19 pandemic. Before you claim the ERTC, consider a few essential strategies to maximize your credits.

Claim the ERTC Retroactively

You should be aware of the deadlines to file your 2020 and 2021 tax credit applications. Thankfully, the IRS gives taxpayers plenty of time to claim tax credits retroactively. 

You can claim the Employee Retention Tax Credit for 2020 until April 15, 2024, and for 2021 until April 15, 2025. You will need to fill out Form 941-X for each quarter that you are eligible for this credit, starting with Q1 in 2020 and ending with Q3 in 2021. 

Review the Additional Advantages for Recovery Startup Businesses

Did you start your business in 2020? If so, you may qualify as a recovery startup business under the ERTC, potentially increasing your tax credits. 

You must meet these criteria to be considered a recovery startup business: 

  • You began carrying out your business after February 15, 2020.
  • Your annual gross receipts did not exceed $1 million for 2020 and 2021.
  • You have one or more employees.
  • You are not eligible for the ERTC under any other requirements, such as experiencing a significant decline in gross receipts.

If you meet these criteria, you can claim up to $50,000 in credits for the third and fourth quarters of 2021. This credit provides up to $7,000 per employee per quarter up to the $50,000 maximum. 

Claim the ERTC Even if You Claimed a PPP Loan 

If you claimed a PPP loan during the pandemic, you may assume that you are not eligible for the ERTC. However, you can apply both of these tax incentives to the same payroll. 

While businesses are no longer eligible for PPP loans in 2022 and beyond, if you claimed a PPP loan during the pandemic, you can still apply for the ERTC. You’ll just need to make sure you don’t “double dip,” which is claiming more than one credit for the same wages. Instead, you can claim the ERTC for any qualified wages you didn’t claim on your PPP application. This tax credit is worth up to $26,000 per employee, so it’s worth looking into, even if you assume you are not eligible. 

Request Advance Payment of the ERTC 

The IRS may take anywhere from nine to 12 months to process Employee Retention Tax Credit applications. If you need the money sooner, you can consider an ERTC loan through a reputable lender.

An ERTC loan may provide some or all of your tax credit payment in advance. While you’ll need to pay something in return, such as interest or fees, this advance payment could help your business overcome an immediate financial hardship.

Work With a Tax Attorney

An experienced tax attorney can help you with your Employee Retention Tax Credit by carefully examining your employment records and claiming all qualified wages. Because the ERTC is a refundable credit, the IRS will owe you the full amount you’re eligible for, even if it exceeds your Social Security tax liability. 

At Dayes Law Firm, we offer personalized tax assistance for businesses. Whether you need help claiming the Employee Retention Tax Credit retroactively with Form 941-X or identifying other tax incentives you qualify for, we’ll provide strategic guidance. Then, we’ll guide you through the application process for any tax credits and help you claim deductions accurately to minimize your tax liability. 

Claiming the ERTC is simpler with our help. Call Dayes Law Firm today at 866-875-1005 or fill out our online form for ERTC tax assistance.