The Employee Retention Tax Credit (ERTC) is a refundable tax credit available to eligible employers who were significantly impacted by the COVID-19 pandemic. If you’re an employer looking to apply for the ERTC, here’s what you need to know.
First, determine your eligibility. The ERTC is available to employers who experienced a significant decline in gross receipts or were subject to a full or partial suspension of operations due to a government order related to COVID-19. Employers can claim the credit for wages paid to eligible employees from March 13, 2020, through December 31, 2021.
Next, calculate the credit. The ERTC is equal to 50% of qualified wages paid to eligible employees, up to a maximum credit of $5,000 per employee for 2020 and $7,000 per employee per quarter for 2021. Eligible wages include qualified health plan expenses and are subject to certain limitations.
Once you’ve determined your eligibility and calculated the credit, you can apply for the ERTC. To do so, you’ll need to file Form 941, Employer’s Quarterly Federal Tax Return, with the IRS. You can claim the credit on Form 941 for the applicable calendar quarter.
If you’ve already filed Form 941 without claiming the ERTC, you can file an amended return using Form 941-X to claim the credit. You can also request an advance payment of the credit using Form 7200, Advance Payment of Employer Credits Due to COVID-19.
Applying for the ERTC can be complicated, so it’s important to seek guidance from a qualified tax professional. The attorneys at dallolawgroup.com have extensive experience in tax law and can assist you with the ERTC application process. Contact them today to learn more.