As the COVID-19 pandemic took the world by storm, the federal government stepped up with measures to help businesses stay afloat. As part of the Coronavirus Aid, Relief and Economic Security (CARES) act, the Employee Retention Tax Credit (ERTC) was introduced to encourage businesses to keep their employees on the payroll despite the economic challenges posed by the pandemic.
To maximize the benefits of this refundable tax credit, understanding ERTC filing deadlines and the significance of timely submission is crucial. This blog is dedicated to helping guide you through key ERTC filing dates and offering practical advice on how to submit your ERTC claim in a timely manner. So, let’s jump right in.
Key Dates for ERTC Submission
Understanding the timeline and ERTC filing deadline is crucial for businesses intending to claim this benefit. Let's break down the critical dates to help you better understand when and for how long you can claim the ERTC.
- Effective Period: The ERTC was in effect from March 12, 2020, to September 20, 2021. In certain cases, businesses could claim the credit until December 31, 2021. The ERTC applies to wages paid during this period.
- Retroactive Claims: Businesses can claim the ERTC retroactively through 2025 if they were eligible in 2020 or 2021 but did not claim it.
- Filing Deadlines: Businesses typically claim the ERTC on their quarterly employment tax returns. To claim the credit retroactively, businesses should file Form 941-X for each quarter where qualified wages were paid. You must file this form within three years of the original Form 941's filing date or two years from when you paid the tax, whichever is later.
- Sunset Date: The ERTC officially ended on September 20, 2021 (or December 31, 2021 for some businesses). Wages paid after these dates are not eligible for the ERTC.
Demystifying the ERTC Filing Process
While the ERTC filing process might appear complex initially, a clear understanding of the steps involved can ensure you accurately claim the credit.
A Quick Walkthrough of the Filing Process
- Determining Eligibility: The first step is to assess if your business qualifies for the ERTC based on the criteria set out in the CARES Act and subsequent legislation.
- Calculating the Credit: Once eligibility is confirmed, calculate the amount of credit you can claim based on qualified wages paid to employees during the ERTC's effective period.
Key Forms You Need to Know About
- Form 941: This is the Employer's Quarterly Federal Tax Return, where businesses typically claim the ERTC.
- Form 941-X: This form, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, is necessary for retroactive claims. It allows businesses to correct errors on a previously filed Form 941 and claim the ERTC for past quarters.
Accuracy and Documentation: Essential for a Smooth Filing Process
Accurate calculation of the ERTC is crucial to ensure you claim the correct amount of credit. Be mindful of the amount of qualified wages paid to employees during the effective period of the ERTC. Note that the definition of qualified wages can vary depending on the size of your business and the year in question.
Proper documentation is also key in the ERTC filing process. This includes records of wages paid to employees and any eligible allocable qualified health plan expenses.
Practical Tips for Timely ERTC Submission
- Start Early: Beginning the filing process early gives you enough time to understand the steps involved, gather the necessary information and handle any issues that come up.
- Gather Your Documentation: Having all your documents ready can streamline the filing process. Proper documentation not only simplifies the filing process but also helps substantiate your ERTC claim if the IRS questions it.
- Understand the Process: Familiarize yourself with the ERTC filing process to ensure a complete and correct submission. If any part of the process confuses you, seek clarification or assistance.
- Consider Professional Help: If the ERTC filing process seems too complex or you're unsure about your ability to navigate it, consider seeking professional help. Tax professionals can offer valuable guidance and ensure your ERTC claim is correctly prepared and submitted on time.
How ETS Can Help Ensure Timely Submission
Filing for the ERTC can be tricky, but remember, you don't have to go it alone. At Engineered Tax Services (ETS), we're dedicated to helping businesses like yours claim the tax credits and incentives they're entitled to, including the ERTC.
Our tax attorneys, engineers and industry professionals bring a wealth of knowledge and expertise to the table. We’ll work diligently to ensure your business meets all deadlines and submits accurate claims. We’ll also make sure you’ve calculated your credit accurately and can defend your claim against potential IRS scrutiny, giving you peace of mind.
If you're feeling overwhelmed by the ERTC filing process, don't worry—that's what we're here for. Get a quick estimate of your potential credit using our ERTC Eligibility Calculator or reach out to us directly if you need more help. We're determined to make sure your business doesn't leave any valuable tax credits on the table.