What is the Employee Retention Credit (ERC)?

The Employee Retention Credit (ERC) is a refundable federal payroll tax credit designed to support businesses who retained their employees through COVID-19. This valuable credit can provide up to $26,000 per employee across the 2020 and 2021 calendar years.

Even though the ERC tax credit expired in September 2021, and an Employee Retention credit moratorium announced in 2023, qualified businesses, nonprofits, and employers can still file paperwork and retroactively receive claims for the Employee Retention Credit. Employers can amend previously submitted forms by filing and submitting Form 941-X so they can retroactively claim the Employee Retention Credit. The deadline for filing a claim relating to 2020 is April 15, 2024.  For 2021 claims, the deadline is April 15, 2025.

The importance of understanding the nuances of the Employee Retention Credit (ERC) remains paramount for businesses seeking financial relief. The ERC tax credit continues to offer a lifeline for eligible employers who navigated the challenges of the pandemic by retaining their workforce. Businesses must stay informed about the evolving guidelines surrounding ERC tax credit eligibility. The ERC tax credit application process, although no longer applicable for current payroll taxes, still holds significant potential for retroactive claims, providing a substantial financial boost for those who qualify.

This year the ERC tax credit eligibility landscape continues to be a critical area for businesses to explore. Eligibility for the ERC tax credit is not just confined to revenue loss or government-imposed restrictions. It also encompasses a broader spectrum of operational impacts due to COVID-19. Understanding these nuances is key to determining eligibility and maximizing potential benefits. While retrospective, the ERC tax credit application process requires meticulous documentation and adherence to specific criteria. Businesses should seek expert guidance to navigate this complex process, ensuring they rightfully claim what they are entitled to under this provision.

Understanding Your ERC Tax Credit Eligibility

You may be eligible for the ERC tax credit if your business or nonprofit experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021.  A business may also qualify if it was under government restrictions related to Covid-19 in 2020 or 2021.

The IRS has also issued a new question and answer guide to help businesses navigate the criteria for ERC tax credit eligibility and determine if they legitimately qualify for the credit.

Why Choose KatzAbosch?

Navigating the ERC tax credit application process can be intricate and time-consuming, as it necessitates a deep understanding of the ERC calculation guidelines. Incorrect or incomplete claims could lead to penalties, interest, and the obligation to repay the ERC funds received. It’s also important to be aware of the increasing prevalence of ERC tax credit scams promising inflated credits or expedited claims, leading businesses into fraudulent or non-compliant situations. To avert these risks, it’s crucial to start the ERC tax credit application process with a proper assessment of eligibility, followed by precise calculations of the credits, and finally, the filing of proper claims.

At KatzAbosch, we have a dedicated Employee Retention Credit team that specializes in helping organizations determine their eligibility for the ERC tax credit. We also excel in preparing the associated calculations and tax forms, ensuring you can take full advantage of this valuable credit.

How KatzAbosch Can Help

Benefit from KatzAbosch’s industry-leading tax incentives and credits expertise in ERC tax credit eligibility, a credit we’ve excelled in since its inception in 2020. With our assistance, clients have successfully claimed tens of millions of dollars in ERC refunds. Our Employee Retention Credit professionals stay up to date with the latest guidance to secure the best long-term benefits for your business. Ready to optimize your tax and business strategy? Reach out to your KatzAbosch representative or contact us today to get started.

Frequently Asked Questions For The Employee Retention Credit

 What is the Employee Retention Credit (ERC)?

The ERC is a refundable tax credit designed to encourage businesses to keep employees on their payroll during the COVID-19 pandemic. It offers significant financial relief to eligible businesses.

Who is eligible for the ERC tax credit in 2023?

Eligibility for the ERC tax credit in 2023 primarily includes businesses that experienced a significant decline in gross receipts or were subject to COVID-19 related government restrictions. Detailed eligibility criteria can be complex and vary based on specific circumstances.

How can KatzAbosch assist with ERC tax credit eligibility and application?

KatzAbosch offers specialized services to help businesses accurately assess their eligibility for the ERC tax credit. Our team provides expert guidance through the application process, ensuring compliance and maximizing potential credit.

What are common pitfalls in the ERC tax credit application process?

Common pitfalls include incorrect calculation of eligible wages, misunderstanding eligibility criteria, and overlooking required documentation. These errors can lead to denied claims or the need to repay funds.

How can businesses protect themselves from ERC tax credit scams?

Businesses should be wary of offers that promise guaranteed or inflated ERC claims. It’s crucial to work with reputable professionals like KatzAbosch, who provide transparent and compliant ERC tax credit services.

What is the deadline for filing ERC tax credit claims?

The deadline for filing ERC tax credit claims depends on the tax year in question. For instance, claims for 2020 must be filed by April 15, 2024, and for 2021 by April 15, 2025. It’s important to consult with a tax professional for specific deadlines.

Can nonprofits apply for the ERC tax credit?

Yes, nonprofits that meet the eligibility criteria can apply for the ERC tax credit. This includes experiencing a decline in gross receipts or being subject to government-imposed COVID-19 restrictions.

Helpful Employee Retention Credit Resources

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