ERC is one of the most successful small business covid relief programs. The ERC aims to provide financial help to the employer, especially the small business owners.
You can consider ERC as a reward for employers for retaining their full-time employees. It lets an eligible employer retain the amount of certain payroll that otherwise would have been paid. How much an employer can hold is determined with the help of qualified wages. Qualified wages are those that employers have paid to their working or non-working employees during 2020 and the first calendar quarter of 2021.
Employers can get instant credit by deducting a certain amount of qualified wages from their quarterly tax returns. Sounds good? Even though the ERC is a wonderful program for small business owners, many of them haven’t taken its benefits yet.
Employee retention credit and PPP, both of the programs, were amended simultaneously. But because of the lack of knowledge and awareness of the ERC program, some employers are still struggling to claim it.
Eligibility Requirements
To be eligible to apply for the ERC, employers must fit in one of these categories.
Any employer who has employed w-2 employees and has less than 500 employees overall can check against this criterion-
- Employers who have to shut down their business operations partially or fully ( in 2020) due to government-imposed restrictions can apply for the ERC.
- Also, employers who have faced a significant decline in their annual gross receipts compared to the previous years can apply for the program.
The criteria apply to all businesses, except self-employed individuals. However, a self-employed individual can apply for his employees, if they have any.
Note- That a business should not have more than 500 employees to apply for the ERC. If the business operates on multiple branches, each branch must not exceed the number of 500 employees.
Is It Still Possible To Claim For The Credit?
It is 2022, so it has been two years since the ERC program was started. So, if you wonder whether you can apply for it now or not, the answer is yes, you can apply for it.
You can file for the ERC credit with your quarterly tax return using form number 941. It will let you get instant credit. However, understanding the requirements and complying with them can be tricky, so it is always best to take expert advice. You can seek help from an ERC consultant who will help you decode the criteria and smoothly apply for the program. But, make sure you choose a legal consultant or ERC small business tax relief service to avoid any issues.
Changes Over The Time In This Program And May Let You Qualify This Time
ERC has been through many changes. So, as a result, the business that was not eligible to apply at the start of the program may qualify now. To understand the current criteria, let’s now take a look at the major changes ERC has gone through-
CARES Act
ERC was introduced through the CARES Act. It verifies the employer under both qualifying wages and medical expenses. And the payroll period that was included was March 12, 2020, to January 1, 2021.
ARP of 2021
ARP provides the employers with wages paid from June 30, 2021, to January 1, 2020. It also added the “recovery startup business” as eligible for receiving the ERC.
IRS Notice 2020-22, 2020-17, and IRB 664
These three notices provide a penalty for employers who have failed to deposit employment taxes. This applies to all the employers who have qualified under the Families First and CARES ACt.
Infrastructure Act § 80604 Amendment
It is another amendment made to the ERC. The amendment applies to wages paid during June 30-October 1, 2021. It also extends the definition of a recovery startup business and removes all the requirements that made recovery startups previously not eligible.
We have attempted to list the major changes to the ERC but have not included all in the list. Please consult with a tax expert or an ERC consultant to know all about the changes.
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The Best To Help You To Claim the ERC Amount
ERC Specialists can help you to decode the complexities that come in the path of claiming the credit. So, if you find it difficult to apply for the credit, they are the experts to guide you with everything, from applying for it to claiming the credit. So, don’t hesitate to reach out.
Lastly, we hope you have found this guide helps with your queries.
You must visit for ERC Assistance and the maximum credit amount.