As we approach the end of the year, businesses need to be aware of the employee retention credit (ERC) and take advantage of it before the 2022 deadline. The ERC is a valuable tax credit designed to help businesses retain employees during the COVID-19 pandemic, and it can provide significant financial support to eligible businesses.
The ERC was first introduced in 2020 as part of the CARES Act, and it has since been expanded and extended through various pieces of legislation, including the Consolidated Appropriations Act and the American Rescue Plan Act. The credit is available to businesses that experienced a significant decline in gross receipts or were subject to a full or partial suspension of operations due to government orders related to COVID-19.
One of the most important aspects of the ERC is that it is a refundable tax credit, which means that businesses can receive a refund from the government even if they do not owe any federal payroll taxes. This can provide a much-needed source of cash flow for businesses struggling to survive during the pandemic.
The deadline to claim the ERC for the 2021 tax year is fast approaching, and businesses need to act quickly to take advantage of this valuable credit. The ERC is claimed on the employer’s quarterly payroll tax filings, so businesses should work with their tax advisors to ensure they are maximizing their eligibility and accurately calculating the credit.
In addition, the ERC has been extended through 2021 and 2022, with changes to the eligibility requirements and calculation of the credit. Businesses should stay informed about these changes and work with their tax advisors to ensure they are taking full advantage of the credit for both the 2021 and 2022 tax years.
It’s important for businesses to harness the power of the employee retention credit before the 2022 deadline, as it can provide much-needed financial relief during these challenging times. By working with their tax advisors to accurately claim the credit, businesses can retain employees and position themselves for a stronger financial future.
In conclusion, the ERC is a valuable tax credit that can provide significant financial support to eligible businesses. The deadline to claim the credit for the 2021 tax year is approaching, and businesses need to act quickly to take advantage of this valuable opportunity. By working with their tax advisors to accurately claim the credit, businesses can harness the power of the employee retention credit before the 2022 deadline and position themselves for a stronger financial future.