If you’ve never heard of the ERC, in short, the Employee Retention Credit (ERC) is an incentive for small businesses to retain employees through COVID-19 restrictions and shutdowns. This credit provides eligible employers a refund on their payroll expenses, such as Medicare and SS taxes, and can be as much as $14,000 per employee. Here’s how you can claim the credit:
- Reduce your employee tax deposits up to the amount of the anticipated credit. Report your total qualified wages for purposes of the employee retention credit on your federal employment tax return; for most employers, this is the quarterly Form 941, or Form 944 for annual filers.
- Use Form 941-X to claim a previous quarter ERC that was not taken.
- Request an advance of the amount of the anticipated credit that exceeds the reduced federal employment tax deposits by filing Form 7200, or you can wait to get a refund when you claim the credits on your employment tax return.
For specific details on who is eligible for this credit, check out our article on the Taxpayer Certainty and Disaster Relief Act. With the passage of the American Rescue Plan Act, the Employee Retention Credit has been extended through December 31, 2021. Even if you didn’t qualify before, you may now. At IOOGO, we are here to help you through the process. Contact us today!