What is ERC, when can you claim it and how
The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer's employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS.
For each employee, wages (including certain health plan costs) up to $10,000 can be counted to determine the amount of the 50% credit. Because this credit can apply to wages already paid after March 12, 2020, many struggling employers can get access to this credit by reducing upcoming deposits or requesting an advance credit
Why should a company care?
The ERC credit is only going to be available until October 2024. They are leaving money on the table if they don’t act now!
Do I need to amend my tax return? If so when?
While you technically have up to three years after filing to amend your tax return, we recommend amending ASAP in conjunction with claiming the ERC. Essentially, the ERC refund is not taxable when received, however, wages equal to the amount of the ERC are not deductible. So, a taxpayer’s wage deduction for a taxable year must be reduced by the amount of the ERC related to that taxable year. This is so that a taxpayer cannot “double dip” and receive a wage deduction and a credit for the same wage expense.
We'll also provide you with a summary of your ERC once it's shipped off so you have the info you need to amend the return.