If you’re familiar with the Employee Retention Credit (ERC), you may wonder exactly what the expiration date is. However, if you’re unfamiliar with the ERC, here’s a quick overview.
The Employee Retention Credit is a tax credit qualifying employers can receive if they paid qualifying wages during the COVID-19 pandemic. It is a refundable tax credit – not a tax deduction – which means more money in your pocket.
Many employers initially used the ERC to offset payroll deposits, but if you didn’t, you can amend your old payroll tax returns and claim a refund. And you’re not too late. You can claim the ERC up to three years after the payroll tax was due.
What is the ERC expiration date?
Due to the pandemic, which began affecting Americans in January 2020, many businesses were forced to close or reduce their employee’s hours in 2020 and 2021. The U.S. government responded by passing multiple stimulus packages, including the Employee Retention Credit.
The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) was passed in March 2020 and included the ERC. It was intended to benefit businesses that either fully or partially suspended operations in 2020 but was ultimately extended through the 3rd quarter of 2021.
The ERC expires after these dates.
There is one exception. Recovery start-up businesses (businesses that began doing business after February 15, 2020) have an expiration date for the ERC of December 31, 2021, as long as they have less than $1 million in revenue and one or more employees, other than owner-operators and family members.
The expiration date for the ERC has lapsed, but it doesn’t mean it’s too late for you to claim the credit.
The deadline for claiming the ERC is three years after the payroll tax return was due (payroll taxes are due on the last day of the month following the quarter you paid wages).
For example, if you paid wages in the third quarter of 2020, your payroll tax is due on the last day of the month following that quarter, which would be October 31, 2020. That means you have until October 31, 2023, to submit an amended payroll tax return in order to claim the ERC (if you didn’t claim the credit on your original tax return).
Is your business eligible for the Employee Retention Credit?
The ERC has undergone numerous changes and has many technicalities, including which employees are eligible, how qualified wages are determined, and much more. Many business owners and executives have unanswered questions because of this.
There is a substantial amount of money you could miss out on if you don’t understand the ERC and claim it incorrectly or fail to claim it at all.
Did you know that you can claim up to $5,000 per employee for 2020? That was substantially increased to a maximum of $7,000 per employee per quarter in 2021, and there is no cap on the credit for the business.
Also, if you’ve already received a PPP (Payroll Protection Program) loan, are you aware that you may still be eligible to claim the Employee Retention Credit?
Let Bottom Line Concepts Help
Bottom Line Concepts can help you make sense of the ERC and help you determine if you qualify (you may be eligible for some quarters but not others).
If you qualify, our experts will help guide you through the process by clearly outlining the steps you need to take so you can maximize your claim.
Contact us today and schedule your free 15-minute phone call to determine your business’s eligibility. We can help apply the aggregation rules to your business, interpret state executive orders, and more.