The Employee Retention Credit (ERC) was introduced as a part of the CARES Act to help employers keep their workers on the payroll during the COVID-19 pandemic. The ERC has been extended several times.
What Is the Employee Retention Credit?
The Employee Retention Credit was designed to provide eligible employers with a refundable tax credit that can help offset their Social Security tax liability.1 The ERC Program has been extended several times since its introduction in March 2020. However, there have been some changes to the credit over time, so it’s important to do your research.
Eligibility for the Employee Retention Credit
To be eligible for the ERC, employers must meet one of two criteria. First, the employer must have had to fully or partially suspend operations due to COVID-19 due to governmental authority. Or, the employer must have experienced a significant decline in gross receipts.2
Employee Retention Credit Application
To apply for the employee retention credit online, eligible employers must report it on their federal employment tax returns, typically using Form 941-X.3 It’s important to understand the process of claiming the ERC, as it can be a valuable tool for reducing tax liability and providing financial relief.
Keep Records of Your Application
Keeping thorough records of your application is another smart move when applying for assistance. This includes saving copies of submitted forms, receipts, and any correspondence you have with the program administrators. If there are any disputes or issues with your application, having clear records ensures you can address them efficiently. It also helps you track the progress of your application more easily.
Stay Updated on Changes to the Program
Financial assistance programs can be subject to changes in eligibility requirements, benefits, or deadlines. It’s important to stay informed about any updates that may impact your claim. Regularly checking official sources and keeping an eye on communications from the program administrators can ensure you don’t miss out on key information. Staying updated helps you remain compliant and prevents any unexpected surprises during the process.
Ensure You Are Eligible Before Claiming
Before you apply for any financial assistance program, it’s crucial to confirm your eligibility. Claiming benefits that you are not entitled to can lead to serious consequences, including having to repay the full amount and facing additional penalties. This not only creates financial strain but also affects your credibility when seeking assistance in the future. Double-checking eligibility requirements ensures you avoid these risks and prevents unnecessary complications.
Beware of Scams Targeting Applicants
Unfortunately, there are numerous scams designed to exploit people looking for financial relief. Fraudsters often pose as government representatives or offer fake assistance to obtain personal information. Be cautious when receiving unsolicited offers of help, and always verify the legitimacy of the source. Stick to official government websites or trusted organizations to avoid falling victim to these deceptive schemes.
Learn More About the Employee Retention Credit Today
Claiming the ERC can be a simple process if you do your homework. Using a tax professional can also help you along the way and ensure you’re receiving the maximum benefits. Don’t overlook this potential chance to save significantly and provide support to your employees.