How to Still Qualify for the ERTC in 2023

Your Business Probably Still Qualifies for the ERTC in 2023

The Employee Retention Tax Credit (ERTC) is a tax credit introduced by the US government to encourage businesses to retain their employees during the COVID-19 pandemic in 2020 and 2021. It is available to businesses and non-profits (as long as they had employees in 2019, 2020, and 2021) that were impacted by the pandemic, local government mandates and restrictions to control infection, whether or not they experienced a significant decline in revenue. The ERC tax credit can help businesses recoup their payroll tax expenses and save money because they helped support their employees and stabilized the economy.

What is the Employee Retention Tax Credit?

The Employee Retention Tax Credit is a refundable tax credit that businesses can claim on their federal payroll tax returns. The credit is available to eligible employers who retained employees during the pandemic in 2020 and 2021, even if they were not able to work due to government orders or a lack of business.

To qualify for the ERTC, businesses must have experienced during the last three quarters of 2020 and first three quarters of 2021 any of multiple impacts including but not limited to one or more of the following:

1. A significant decline or delay in gross revenue — Businesses that experienced a decline of 20% or more in gross receipts for any quarter in 2020 or 2021 compared to the same quarter in 2019 are eligible.
2. Full or partial suspension of operations — Businesses that were fully or partially suspended due to government orders related to COVID-19 are eligible, regardless of their revenue.
3. Business operations were changed because of health mandates, travel restrictions, changes to meetings with clients, or cancellation of projects
4. Supply chain disruption and production impacts during the affected quarters.

How much is the Employee Retention Credit worth?

The maximum ERTC claim possible per employee is $26,000. The actual amount is calculated based on the total impact on the business for all possible factors, the number of employees in 2019, 2020, and 2021, and reduced by any Paycheck Protection Program loans received and forgiven.

The credit is worth up to $5000 per employee in 2020 and 70% of the first of $10,000 of qualified wages paid to employees in the each of first three quarters of 2021. This means that businesses can claim a maximum credit of $21,000 per employee for the entire year of 2021.

For example, if a business paid an employee $20,000 in qualified wages and benefits during the first quarter of 2021, they could claim a credit of $7,000 (70% of $10,000). If they paid the same employee $10,000 in qualified wages during the second quarter, they could claim a credit of $7,000 (70% of $10,000).

The maximum ERTC claim your business can claim per employee should be calculated by specialized expert CPAs based in the United States like we use. We have three teams of experienced specialized CPAs that calculate ERTC claims considering all allowable factors that impacted your business (or non-profit organization).

How can your business claim the Employee Retention Tax Credit retroactively?

To claim the ERTC retroactively, businesses must file documentation including Form 941x, the employer’s quarterly federal payroll tax return, with the Internal Revenue Service (IRS). The credit can be claimed on the last three quarters of 2020, the first, second and third quarters of 2021. As the calculations and qualification rules have changed with revised IRS rules and guidance they have become very complex. Most business income tax and payroll CPAs are relieved when they learn our US-based CPAs take responsibility for results and the liability for any errors. They know that our licensed CPAs won’t endanger or risk losing licensure.

Our licensed CPAs not only calculate the maximum legally allowable ERTC, they provide after agreeing upon payment full audit protection with complete documentation to our clients. We don’t charge a fee to find out whether your business would qualify for the ERTC. If an independent legal opinion is necessary to justify the basis for your ERTC claim, we have a law firm available to help you for a flat fee.

Businesses can choose to claim the Employee Retention Credit for each quarter they are eligible, and there is still time to claim the ERTC retroactively by both businesses and non-profits. As noted earlier, the ERTC is fully refundable, meaning if the tax credit exceeds the amount of payroll taxes owed, businesses can receive a refund of the difference.

It is always important for businesses to keep accurate records of the wages they paid to eligible employees. Keeping a payroll journal is required, and we help you gather the necessary information the federal government requires to file these claims. We work with you to navigate the labyrinthine regulations and requirements to qualify for the ERTC.

If you’re curious at all whether you can qualify, how much you your business could qualify to receive for this tax credit or any other potential tax credits, just schedule your free 15–30 minute tax credit consultation with one of our tax strategy consultants. If you’ve already claimed the ERTC, your business may also qualify for other tax credits that will reduce your income tax liabilities and carry forward.

Claim ERTC While Still Available

The Employee Retention Tax Credit is a valuable tool for businesses that were impacted by the COVID-19 pandemic. It can help businesses save money and get a much needed injection of cash that doesn’t need to be paid back. You and your business deserve this for supporting your employees and helping to stabilize the economy.

If you are a business owner and think you may be eligible for the ERTC, it is important to consult with a tax strategy expert to ensure that you are following all of the necessary guidelines and procedures and getting the most accurate information about what tax credits your business may qualify for. With the right guidance, ethical calculations, and documentation from our experienced teams of CPAs who triple check each team’s work, your business can successfully claim the ERTC and take advantage of this valuable tax credit.

About the author:
Michael Glowacki helps business owners recover profits and use tax-advantaged strategies to keep more wealth. He mentors and trains people to improve their financial, personal, and professional outcomes.