The employee retention tax credit (ERTC) has been one of the most significant provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, aimed at helping employers keep their employees on the payroll amidst the economic uncertainties caused by the pandemic.
The ERTC provides eligible employers with a credit of up to $5,000 per employee for wages paid between March 12 and December 31, 2020, and up to $14,000 per employee for wages paid between January 1 and June 30, 2021. The credit can be claimed against the employer’s share of Social Security taxes or against the taxes they have already paid.
Unfortunately, many eligible employers have not yet claimed the ERTC, mistakenly believing they do not qualify, or not realizing the value of the credit. According to a recent survey, only about 25% of eligible employers have claimed the credit.
Don’t leave money on the table
The ERTC is a valuable opportunity for eligible employers to receive significant financial assistance to cover the costs of keeping their employees on the payroll. The credit can mean the difference between having to furlough or lay off employees, and being able to retain them as the economy recovers.
Eligible employers include businesses that had either a full or partial suspension of operations during any calendar quarter in 2020 or 2021 due to government orders related to COVID-19, or had a significant decline in gross receipts in any calendar quarter compared to the corresponding quarter in 2019.
How to claim the credit
To claim the ERTC, eligible employers can file Form 941, which is used to report employment taxes, for the applicable calendar quarters. The credit can be taken on the same form by reducing the employer’s share of Social Security taxes or by requesting a refund of taxes already paid.
Employers are advised to consult with their tax advisors to ensure they are eligible and to maximize the credit.
Submit before it’s too late
Employers must act now to claim the ERTC before the opportunity expires. The deadline to submit a claim for the 2020 credit is October 31, 2021, while the deadline for the 2021 credit is January 31, 2022.
Failure to claim the credit could mean missing out on substantial financial assistance and could put the livelihoods of employees at risk.
In conclusion, eligible employers should not leave money on the table and claim the ERTC before it’s too late. The credit provides significant financial assistance to help businesses keep their employees on the payroll during these challenging times, and employers should take advantage of this opportunity while it lasts.