If your business is still suffering from the impact of coronavirus, ERC is the best chance to recover from it.
Perhaps you might have had a thought claiming the ERC, but requirements were too difficult to decode. And now you are afraid of losing your only chance. Well, don’t worry. There is still a ray of hope for you.
ERC credit has been through many changes. So the business that did not qualify at the beginning of the program may qualify now. But how?
Let’s find out more about it-
Employee Retention Credit Tax – Introduction
As most people say, ERC was started as a reward for retaining W-2 employees. According to the amendments made in 2021, employers can now retain up to 10,000 per employee from the quarterly tax returns. So, it is a huge tax relief for someone dealing with the bad days in their business.
And that is also the reason why it is sometimes referred to as a refundable tax. Any small company or business can qualify for the ERC.
But the question is whether you can still take its benefits in 2022.
Yes, you can still claim the ERC and safely get through all the financial trouble. You can claim it based on your wages during 2020 and 2021.
But, now, claiming the ERC can be a little more complicated than ever before, so it would be best if you take assistance from an ERC consultant as they can help you concur all the technicalities in the program and get the tax relief.
After you have analyzed everything, including the qualified wages, you can file for it with the quarterly tax returns using form number 941, which you can find on the website of IRS. With 941, you can receive the instant ERC credit by deducting the number of qualified wages from the total tax returns.
If you do not have enough tax credits, use form number 7200 instead of 941. It will let you qualify for the advance credit.
There are many myths and facts popular surrounding the ERC. So, let’s know some of them-
ERC was started simultaneously as the PPP loan, but not every business owner knows about it. Out of 10 businesses, 8 either don’t know about the ERC or haven’t heard about it. So, the amount allocated for the ERC is still untouched on the tables.
When ERC was amended, there were a lot of businesses that didn’t qualify for it then. But over time, ERC has been through many changes. So the ERC requirements to qualify have also changed. Back then, you could only qualify if your business consisted of w-2 employees and kept running partially or fully in 2020 and half of 2021.
After the changes, the gross receipt value was included in the ERC qualification conditions. And, now the business that faced a significant declination in the gross receipt can qualify for the programs. Most business owners don’t know about the gross receipt factor like other important terms consisting of the ERC, so they do not even have tried for it again. It is estimated that over 50% of the small business, yet didn’t receive the benefits of the ERC.
So, if you also are one of those business owners, you stand a good chance to qualify and receive the tax credit.
These calculations will allow you to get an idea about your status to qualify for the ERC. But if you find it difficult, please consider taking advice from an ERC consultant.
- Calculate your quarterly revenue summary for the calendar quarter of 2020 and the first calendar quarter of 2021.
- Calculate all your payroll tax returns.
- Also, calculate the qualified wages, but make sure to include only those wages you haven’t calculated the same wages for PPP or any other tax relief.
- Prepare a report for your business locations and the number of employees working per location.
- Also, you will need a full report for the employees who didn’t work during 2020 and 2021, but you paid the full wages.
- Family status for every employee.
- Insurance expenses report for each employee.
Are you still finding ERC complicated? Then, ERC Specialists are here to help you. They can help you from start to finish so that you don’t have to go through troubles anymore. With them, applying for and receiving the ERC will be much easier and smooth.
You can also read more about the ERC program here!