How to claim the Employee Retention Tax Credit or ERTC in 2024? Is it still possible ??
As businesses strive to recover from the economic turmoil caused by the COVID-19 pandemic it is crucial for employers and employees alike to be aware of the numerous opportunities available to aid stability and growth. One such opportunity is the Employee Retention Tax Credit (ERTC).
ERTC, is a tax credit that may interest many employers still right now in the United States. And, it is little or poorly known. This blog post aims to provide a comprehensive understanding of the ERTC, its advantages, and the importance of taking advantage of it before its expiration in 2024.
What is the Employee Retention Tax Credit (ERTC)?
The ERTC is a tax incentive enacted by the U.S. government as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. Its primary purpose is to encourage businesses to retain their employees during challenging economic times, such as the coronavirus pandemic.
Under the ERTC, eligible employers can claim a refundable tax credit against the federal payroll taxes they owe, equal to a percentage of qualified wages paid to employees.
The CARES act on march 25, 2020 introduced this tax credit:: A business owner can get up to 26 000 dollars per w-2 employee in tax credit (for 2020 – 2021 ) paid by IRS check.
And you can check it out on the IRS website irs.gov.
Not many people know about this tax credit as it was part of the CARES act along with the payroll protection plan or PPP. The PPP was a large governmental program launched by the Trump administration through the CARES Act to support businesses paying their employees.
Like back then business owners had to choose between PPP or ERTC. Employers highly acclaimed the PPP because it was easy to obtain. But that changed in March 2021 where you could actually get both PPP and ERTC.
And very few employers are aware of the Employee Retention Tax Credit updates. For this reason. few applied. If you have already applied for the PPP, it is still possible to claim a part of the ERTC. Tax firms advertise it now.
Employee Retention Tax Credit qualifications
- Are you an US employer ?
- Do you have 2 or more w-2 employees ? (*)
- Have you been affected by covid-19 ?
- businesses must have experienced a full or partial shutdown due to COVID-19
- OR they must have seen their gross receipts decrease by at least 20% when compared with the same quarter in the prior year.
If you answer YES to these 3 questions, you should be able to qualify for the Employee Retention Tax Credit or ERTC.(*) not including the employer and any immediate family members. So the minimum is 2 and the maximum is 500 w-2 employees per entity.
This tax system is available to for-profit and non-profit businesses, even if you were a start-up. If a business owner pays payroll tax with at least 2 full-time w-2 employees then he may be eligible for the ERTC.
Some particular cases may be accepted: For example, some restaurateurs had to close their indoor restaurants but at the same time, they decided to open the terrace or to develop take-out meals to compensate…
So it’s better to ask an advisor first, rather than losing out on the benefits, thinking you are not eligible. So, CLICK HERE To Check Your Eligibility
The Employee Retention Tax Credit application
While highlighting the benefits of the ERTC, it is essential to maintain a balanced perspective. The complexity of eligibility criteria, documentation requirements, and other administrative processes associated with the ERTC may pose a challenge for businesses, particularly small enterprises with limited resources.
Note that you can apply once to the ERTC, it means you must not mistake. That’s why it is better to rely on ERTC experts, who have already successfully filed hundreds of claims.
However, it is important to note that numerous organizations, both private and public, provide support in navigating the application process and ensuring compliance.
This tax firm closely follows the latest updates. They find out the latest details to optimize each case. You may ask them all your queries. How does it work ? Are you eligible in particual situation? How to calculate the tax credit for each w-2 employee? This company closely follows each file.
If you are a business owner and haven’t applied yet, not knowing how it works. This tax firm will help you recover all or a part of this tax credit.
Many business owners believe that they are not eligible for several reasons:
- if they did not close their business or didn’t experience a big drop in gross receipts during this period … what is not true. If they have been affected by different aspects of covid-19, then they are likely to qualify for this tax credit. You just have to explain your situation to the experts and they will help you, checking each element for you.
- Some entrepreneurs think they are not eligible because they have already benefited from PPP loans; Now, you know it is possible to combine both and still get a complement with ERTC.
- Sometimes they heard in the press that ERTC ended at the end of the 3rd quarter of 2021 and that is not correct either. Business owners still have time to qualify for the tax credit for a little while. And the tax firm can help them to retroactively claim the credit by filing an amended tax return.
The Employee Retention Tax Credit deadline in 2024
The ERTC is set to expire on April 15, 2024.
Acknowledging the time sensitivity of this incentive is crucial to avoid missed opportunities.
By understanding the timeline, employers can still take advantage of the ERTC, during a very limited time and plan their finances accordingly. Early planning enables businesses to maximize their claimable credits and develop long-term strategies to retain employees and drive growth.
Advantages of the ERTC
- Job Retention and Stability:
The ERTC acts as a lifeline for businesses by providing them with financial assistance to retain their employees. By reducing the cost of retaining workers, the ERTC encourages employers to avoid layoffs or furloughs, ensuring job security for their workforce.
Several studies have demonstrated that job retention programs, such as the ERTC, lead to higher productivity, employee satisfaction, and overall company performance.
- Financial Stability for Businesses:
For struggling businesses, the ERTC offers significant financial relief during uncertain times. By providing eligible employers with a refundable tax credit of up to $7,000 per employee per quarter, the ERTC can help alleviate cash flow issues, cover operating costs, and ensure continued operations. see :The Impact of ERTC in Industries , by Chuck Harmon, Small Business Advocate.
This infusion of funds can enable businesses to invest in innovation, marketing, or even new job creation, stimulating further economic growth.
- Economic Growth:
By preserving jobs and supporting businesses, the ERTC contributes to overall economic growth. Encouraging job security and financial stability enables employees to maintain spending power, supporting various industries and local businesses.
A study conducted by the National Bureau of Economic Research, found that job retention programs during economic downturns have positive long-term effects on GDP, business investment, and consumer spending.
Numerous businesses have already benefitted from the ERTC, showcasing its positive impact on job preservation and economic growth.
The Employee Retention Tax Credit (ERTC) has become a pivotal tool for businesses navigating the economic challenges brought by the pandemic. Its numerous advantages, such as job retention, financial stability, and economic growth, warrant attention and action from both employers and employees.
However, it is crucial to act swiftly, as the expiration of the ERTC in 2024 approaches. By understanding the intricacies of this incentive, its potential benefits, and the resources available to support businesses in utilizing it effectively, we can empower ourselves and contribute to a stronger and more stable economy.
With the Employee Retention Tax Credit, businesses can retain their valuable employees, maintain financial stability, and contribute to overall economic growth. Let us seize this opportunity and make the most of the ERTC before it’s too late.