Is ERTC Still Available For 2021?

Main Points

The ERTC (Employee Retention Tax Credit) can still be claimed for 2021, but only retroactively.
Businesses affected by COVID-19 can get up to $26,000 per employee in tax credits.
To claim the ERTC, you must understand the eligibility requirements and the application process.
Proper documentation and meeting deadlines are crucial for a successful ERTC claim.
Time is of the essence as this credit won’t be available forever.

ERTC 2021: How to Claim the Tax Credit Retroactively

2021 was a year of many changes, but one thing remains constant for businesses: the Employee Retention Tax Credit (ERTC). The ERTC was created to help businesses that kept their employees on payroll during the pandemic. This tax credit is not a one-time opportunity. You can still claim it for 2021. Let’s go through the process step by step.

Understanding ERTC

The ERTC is a tax credit that the government refunds to employers. It was created as a financial safety net during the turbulent times of the pandemic. It’s the government’s way of saying thank you, in cash, for keeping your team intact. Consider it a monetary reward for helping to keep the economy steady by keeping your staff employed.

Information on Retrospective Claims

You may be wondering, “It’s already 2024, can I still claim the ERTC for 2021?” The answer is absolutely! The government knows that many businesses are just starting to recover, and it has made allowances for you to claim the ERTC for 2021, even now. But there’s a caveat: time is running out, and deadlines for retrospective claims are fast approaching. So, it’s time to get started and claim your deserved reward.

Who Can Apply for the ERTC in 2021?

Before you get started, you’ll need to know if you’re eligible. We are here to help you with that. The ERTC isn’t just for certain businesses; it’s for most businesses. Whether your business is large or small, you could be eligible. But, because this is a government program, there are certain criteria you must meet to qualify.

Who Can Apply?

First and foremost, let’s discuss who can benefit from this tax credit. If you’re a business owner who has been impacted by the pandemic, then this information is for you. The ERTC is open to a wide variety of businesses, including non-profits. So, whether you own a busy restaurant or a small not-for-profit organization, you could be eligible for the ERTC.

How COVID-19 Has Affected Business Operations

The ERTC is designed to help businesses retain employees during difficult times. To qualify, your business must have been disrupted in some way by COVID-19. This could be a full or partial suspension of your business operations due to government orders, or a significant drop in sales. If this describes your business in 2021, you may be eligible.

Imagine you’re a gym owner and your business was shut down for months because of a state-imposed lockdown. Or, maybe you own a retail store and saw your sales plummet due to a significant decrease in foot traffic. These are the kinds of situations the ERTC was meant to help with.

Understanding Revenue Decreases

Let’s dive into the specifics. To be eligible, you must demonstrate that your gross receipts for a quarter in 2021 were at least 20% lower than the same quarter in 2019. It may seem like the government is asking you to take a trip back in time, but it’s a journey worth taking if it means securing your ERTC.

Let’s pretend it’s the third quarter of 2021 and your business has made $80,000. If you made $100,000 or more in the third quarter of 2019, then congrats, you have passed the decline in gross receipts test!

Act Now

Let’s cut to the chase. If you’re eligible for the ERTC, there’s no time like the present. The deadlines for claiming this credit are not flexible. The IRS has set a deadline for filing amended payroll tax returns, which is typically three years from the original filing date. This means you have until April 15, 2025 to claim the ERTC for 2021, but why wait when you could use that money now?

So, the first thing you need to do is circle the date on your calendar. The deadline to amend your 2021 quarterly payroll tax returns is coming up fast. If you miss this deadline, you could be saying goodbye to a large amount of money. Moreover, taking action now means you’re less likely to be caught in a rush as the deadline nears. It’s like beating the holiday shopping crowds by getting your gifts in October. Smart move!

Documents You Need to Apply

Applying for the ERTC is like preparing for a trip, but we walk you through the process! Just as you wouldn’t leave home without your passport and tickets, you need to have all the necessary documents on hand to apply. This includes payroll records, tax filings, and proof of eligibility, such as records showing a drop in revenue or government orders that impacted your operations.

Here’s what you’ll need to pack in your ERTC ‘bag’:

Records of employee wages paid out, such as payroll journals or ledgers.
Your Employer’s Quarterly Federal Tax Returns, or Quarterly Form 941s.
Proof of the decrease in gross receipts.
Any government orders that resulted in a full or partial shutdown of your business operations.

Having this documentation ready to go will make your application process go more smoothly. It’s like having your boarding pass and ID out and ready to go when you’re next in line at airport security – it just makes everything go more smoothly.

“ERC Tax Credit | ERTC Express” from ertc.com and used with no modifications.

How to File

Now, let’s discuss the filing process. You don’t want to be unprepared when filing for the ERTC, so let our experts help! It requires you to file an amended payroll tax return using Form 941-X for each quarter you’re claiming the credit. You’ll use this form to show the IRS how much you’re owed in ERTC for the wages you paid.

But don’t fret, you don’t have to traverse these waters by yourself. We are specialists who have a deep understanding of the ERTC, and they can assist you in smoothly sailing through the process. By partnering with a professional, you can guarantee that your claim is correct and that you are getting the most out of your credit.

Keep in mind, the IRS looks at these claims very closely, so it’s important to be precise. It’s not just about filling out the forms; it’s about giving a clear and accurate picture of your eligibility and the credit you’re entitled to.

Avoiding Common Errors

Even the most experienced of us can make errors, particularly when it comes to complicated tax issues like the ERTC. But these errors can be expensive. So, let’s make sure you’re not missing out on any money or attracting unwanted attention from the IRS.

Steer Clear of Mistakes

The biggest mistake you can make is filing an inaccurate claim. This might happen if you’re not familiar with the most recent ERTC rules or if you’re not confident about your math. Checking your work twice or having someone else review your claim can make a world of difference.

Here are some ways to prevent errors:

Make sure to use the right numbers for the wages you’ve paid, and don’t include wages that can’t be used for the credit.
Double-check that you’ve correctly calculated the decrease in gross receipts.
Ensure that the wages you’re claiming for the ERTC weren’t also claimed for PPP loan forgiveness, as you can’t claim both.

If you make a mistake, it could delay your claim or even result in an audit. It’s like checking an important email before you send it – taking a moment to review can save you a lot of problems.

Stay Alert to Scams

Another thing to watch out for is scams. Any time there’s a financial incentive, there’s a risk of fraud. Scammers may promise guaranteed credits or quick refunds. If it sounds too good to be true, it probably is. To stay safe, only work with trusted professionals and follow official IRS guidance.

What’s Next for ERTC

Looking ahead, the world of tax credits, including the ERTC, is always changing. Although the ERTC for 2021 is a sure thing, there could be possible changes and legislative updates for upcoming tax years.

What You Need to Know About Possible Changes and New Laws

It’s important to keep up with these changes. You don’t want to miss out on any upcoming credits or be surprised by new requirements. Here’s what you can do to stay in the know:

Keep visiting the IRS website for updates on the ERTC and other tax credits.
Sign up for newsletters from reliable tax and business advisory services.
Speak to a tax professional who can notify you of any changes that may affect your business.

Remember, knowledge is power, especially when it comes to tax credits. By keeping yourself updated, you’re not just safeguarding your business – you’re setting it up for success.

Being prepared for potential changes in laws or tax credit programs is a proactive measure that can save your business a lot of trouble in the future. Although the ERTC for 2021 is currently available for retroactive claims, it’s crucial to be prepared for any extensions or changes that may occur. Keep your financial paperwork in order, keep clear payroll records, and keep in touch with a knowledgeable tax professional who can help you navigate any changes.

Being proactive and staying informed will ensure that if the ERTC or similar programs are extended or modified, your business will be in a good position to benefit from it. It’s like keeping your car’s gas tank full; you may not need to drive anywhere right now, but you’ll be ready to hit the road whenever necessary.

Commonly Asked Questions

Are new businesses eligible for the ERTC in 2021?
Is it too late to file for the ERTC for 2021?
How has the Infrastructure Investment and Jobs Act impacted the ERTC?
What are the differences in the ERTC program from 2020 to 2021?
Can the ERTC be claimed for wages that were covered by PPP loans?

These are the questions that are floating around in the heads of many business owners. Let’s break down each one to give you the understanding you need.

Is ERTC accessible to businesses started in 2021?

Yes, it is! Businesses that began after February 15, 2020, are classified as “Recovery Startup Businesses” and are eligible for the ERTC under certain circumstances. For these businesses, the credit may be claimed against wages paid up to $50,000 per quarter in the third and fourth quarters of 2021. This is a fantastic opportunity for new businesses to gain some financial relief.

Keep in mind, though, that there are certain requirements you must fulfill. It’s always a good idea to speak with a tax expert to make sure you’re doing everything correctly.

Can I still apply for ERTC for 2021?

Absolutely! You can still claim the ERTC for 2021, but don’t wait too long. As previously stated, time is running out, and you must file amended payroll tax returns before the deadline. With proper documentation and help, you can still get this important tax credit for your business.

So, if you haven’t claimed the ERTC yet, now is the time to do it. You might want to consider getting in touch with experts, such as the ones at ERTC Express, who can walk you through the process and help you get the most out of your refund while reducing risk.

What impact has the Infrastructure Investment and Jobs Act had on ERTC?

With the signing of the Infrastructure Investment and Jobs Act into law on November 15, 2021, the ERTC was prematurely terminated for the majority of employers, effective September 30, 2021. The ERTC was initially intended to be accessible for the entire 2021 calendar year. Despite this, businesses are still able to claim the ERTC for wages that were paid up until the end of the third quarter of 2021.

This amendment doesn’t impact the ability to claim the credit retroactively for qualifying wages paid when the ERTC was active.

How did the ERTC program change from 2020 to 2021?

There were a few key changes to the ERTC from 2020 to 2021. The most significant changes were that the credit rate increased from 50% to 70% of qualified wages, and the limit on creditable wages per employee increased from $10,000 annually to $10,000 quarterly. This means you could potentially claim a much larger credit in 2021 compared to 2020.

Furthermore, the standards for what is considered a substantial decrease in gross receipts have been lowered, thus making it more accessible for businesses to meet the criteria. For a comprehensive understanding and to see how these amendments may affect you, consulting with a tax professional would be beneficial.

For example, the experts at ERTC Express can offer customized advice that fits your business’s specific circumstances.

Is ERTC applicable to wages covered by PPP loans?

This is a point that needs to be handled with care. At first, companies weren’t allowed to claim the ERTC for wages that were paid with money from a Paycheck Protection Program (PPP) loan. But later laws made it possible for employers to claim the ERTC even if they got a PPP loan, as long as the wages used for the ERTC aren’t the same wages used to get PPP loan forgiveness.

Think of it like using a coupon and a store credit at the same time – you can take advantage of both, but you can’t use them on the same item twice. To make sure you’re doing this right and not making any mistakes, you might want to get advice from a tax professional who can help make sure you’re getting the most out of your benefits without breaking any rules.

In summary, the ERTC for 2021 is still a great way for eligible businesses to get back some of the money they spent on keeping employees on the payroll during a tough year. It’s important to understand the requirements, get your paperwork in order, and file correctly to claim your credit. And don’t forget, the ERTC isn’t the only tool you have. Look for other credits and incentives that could help your business. With the right strategy and expert help, you can take advantage of these opportunities and make your business’s financial future stronger.