If your business hasn’t claimed the 2021 Employee Retention Tax Credit (ERC), there’s still time—but you must act fast to secure your refund,
Employee Retention Tax Credit: What It Is and How Much You Can Claim
The ERC is a refundable tax credit. It is designed to support businesses that retained employees during the COVID-19 pandemic. For the 2021 tax year, eligible businesses can claim up to $7,000 per employee per quarter for the first 3 quarters. For a total of up to $21,000 per employee.
For example, if your business qualifies and has 10 eligible employees, you could receive up to $210,000 in refundable tax credits.
Who Qualifies?
Your business may qualify if it meets one of the following conditions for Q1, Q2, or Q3 of 2021:
- Significant decline in gross receipts – Your business experienced at least a 20 percent decline in gross receipts compared to the same quarter in 2019.
- Full or partial suspension of operations – Your business faced a federal, state, or local government-ordered suspension of operations due to COVID-19 restrictions.
- New businesses (recovery start-up businesses) – If you started your business after February 15, 2020, you may qualify for a credit of up to $100,000.
Why You Must Act Now
The ERC is claimed by filing an amended payroll tax return (Form 941-X) for the relevant quarters. The deadline to file your 2021 Employee Retention Credit claims is April 15, 2025—and this date is fast approaching.
Many businesses miss out on this tax credit because they assume they don’t qualify or it’s too late to apply. Even if you received PPP loans, you may still be eligible for the 2021 Employee Retention Tax Credit if you don’t use the same wages for both programs.
Time Is Running Out
If you are eligible for the 2021 ERC, you could have substantial money on the table. The IRS deadline for amended payroll returns is April 15, 2025. Start the process soon.
Sterling Tax and Accounting is here to help your business with tax planning! Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket. If your accountant only files taxes, you might be overpaying.
Learn how to proactively save on taxes by scheduling a call with our tax planning specialists.
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