Retroactively Filing for the Employee Retention Credit Through 2025

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If you’ve recently discovered that you might be eligible for the Employee Retention Credit (ERC) and haven’t filed yet, there’s good news – you’re not too late. 

ERC is available for businesses that continued operations and were subject to modification due to a governmental order if the modification had more than a nominal effect on the business operations, such as limiting commerce, travel, or group meetings. 

You may also qualify if you experienced a substantial decline in gross receipts. Your gross receipts must fall below 50% for the same quarter in 2019 (for 2020) and below 20% for the same quarter in 2019 (for 2021).

Qualifying employers are eligible to claim the ERC based on qualifying wages they paid to their employees from March 13, 2020, through September 30, 2021.

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What are Qualifying Wages?

Qualifying wages include wages paid to your employees plus allocable health plan expenses. These wages are capped at $10,000 per employee for the entirety of 2020 and $10,000 per employee per quarter for 2021.

The amount of ERC is 50% of qualifying wages in 2020 and 70% in 2021, resulting in a maximum $5,000 credit per employee in 2020 and up to $21,000 per employee in 2021, for a total of up to $26,000 per employee. There is no limit to the number of employees considered eligible.

What is the Deadline for Claiming the ERC?

You may file a claim for the ERC up to three years after your original payroll taxes were due, which is typically on April 15. As a result, employers can claim the 2020 ERC until April 15, 2024, and the 2021 ERC until April 15, 2025. 

To complete your claim, you must file Form 941-X (Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund) for each quarter you paid qualifying wages. 

The updated ERC, retroactive to March 27, 2020, also allows you to claim the ERC if you received Payroll Protection Program (PPP) loans to claim qualified wages not treated as payroll costs in obtaining forgiveness of a PPP loan.

Can You File Retroactively as a Startup Business in 2020 or 2021?

As part of the American Rescue Plan Act of 2021, your startup business may be eligible if you meet these criteria:

  • You started your business on or after February 15, 2020.
  • Your annual gross receipts didn’t exceed $1 million for individual 2020 and 2021 tax years.
  • You had one or more W-2 employees, not including owner-operators or family members.

In addition, if you purchased an existing business that was operational on or before February 15, 2020, you may be considered a recovery startup business, depending on your circumstances.

Since the rules concerning ERC eligibility are complex, contact Bottom Line Concepts to see if you qualify and the amount of credit you’re owed. We’ve helped over 23,500 businesses enroll and recover over $4 billion in credits.

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