Did I Miss the Employee Retention Credit 2021 Deadline?
Despite 2020 being three years in the rearview mirror, some business owners are still learning that they may be eligible for COVID-19-related relief programs like the Employee Retention Credit (ERC).
The ERC was established as a part of the CARES Act to help small to medium-sized businesses recover from financial repercussions caused by the pandemic. This payroll tax refund could potentially put hundreds of thousands of dollars back into your business. Did your business miss the Employee Retention Credit deadline for 2020 or 2021? Here is everything you need to know about claiming the ERC today.
Employee Retention Credit 2020 and 2021 deadlines
Although the Employee Retention Credit (ERC) program for 2020 and 2021 has expired, there is still time for eligible businesses to claim the ERC retroactively. This is made possible through guidelines provided by the IRS allowing for amendments to payroll tax returns for up to three years from the date of filing.
Your business may still be eligible for the ERC
It’s true! Your small to medium-sized business can still receive a payroll tax refund — but you need to make sure it qualifies.
2020 ERC qualifications
● You had less than 100 employees on your payroll in 2019.
● You kept employees on your payroll.
● Your business suffered during the pandemic:
● Your revenue decreased by 50% or more for any 2020 quarter when compared to the same quarter of 2019.
OR
● Your business was forced to shut down or partially suspend operations due to a government order for any quarter of 2020.
2021 ERC qualifications
● You had less than 500 employees on your payroll in 2020.
● You kept employees on your payroll.
● Your business suffered during the pandemic:
● Your revenue decreased by 20% or more during any of the first three quarters of 2021 when compared to the same quarter of 2019.
OR
● Your business was forced to shut down or partially suspend operations due to a government order during the first three quarters of 2021.
ERC refund additional considerations
IRS Notice 2021-49
The IRS N-2021-49 made changes to qualifications as well as which 2021 quarters are included in your payroll tax refund. First, qualified wages now include wages paid by a recovery startup business. Additionally, businesses that are not classified as recovery startups can only claim the ERC for 2020 and for the first three quarters of 2021.
The good news is that there was no change to how much an eligible small business could receive for 2020 through Oct. 1, 2021.
Why you should apply for the Employee Retention Tax Credit
The money isn’t a loan
Unlike the PPP, the ERC is not a loan, it’s money your business can use to recover from the pandemic. Currently, it’s estimated that the IRS will process amended payroll tax returns for the ERC within six to nine months upon receipt. What could your business do with hundreds of thousands of dollars?
It’s a lot of dough
Eligible businesses can receive up to $5,000 per employee for the ERC for 2020 and up to $7,000 per quarter for the first three quarters of 2021. That’s a grand total of up to $26,000 per employee. This money can be transformative for a business.
How to apply for the ERC
If eligible, you can claim your business’ ERC refund using the following steps:
- Determine if your business is eligible for the ERC
- Check for and gather the necessary paperwork
- Fill out an amended Federal Form 941-X
- Contact an ERC originator to help you file the necessary paperwork
- Send in the paperwork
We’re here to help
Working with an ERC originator that understands the complexities of ERC legislation is a great way to know if you are eligible to file for the ERC refunds that the IRS will allow. Our goal at Innovation Refunds is to help businesses across the country thrive post-pandemic through the use of a payroll tax refund.
Fill out our intake form to find out if your business may be eligible.
