It’s 2023, but you still have the chance to qualify for the employee retention credit (ERC) for the 2020 and 2021 calendar years. This credit can potentially help you recover a significant amount of money.
The ERC is a refundable tax credit against certain employment taxes. To claim this credit, it is necessary to amend your payroll tax returns for 2020 and 2021. While this might seem like a cumbersome process, the financial benefits can make it well worth the effort. For instance, if your business has 12 employees and meets the qualifications for maximum tax credits, you could receive a total of $312,000.
There are two primary routes to qualifying for the ERC:
1. A decline in gross receipts.
The most straightforward way to qualify is by demonstrating a decline in your gross receipts during the years 2020 and 2021. It is important to note that the decline does not have to be directly caused by COVID-19.
2. Government order causing more than a nominal effect.
If a government order caused your business to fully or partially shut down, you might qualify for the ERC for the wages paid during the shutdown period.
The deadline to claim the ERC for 2020—April 15, 2024—is about 9 months away.
We strongly recommend, if eligible, that you act promptly to maximize your potential benefits from this program.
As one of the THREE BEST RATED Gilbert, Arizona accounting firms, we can provide more information about this process.