What to Expect From the ERC Tax Credit in 2023

The Employee Retention Credit (ERC) has thrown businesses a much-needed lifeline over the past couple years. This tax credit encouraged companies to retain staff during the economic uncertainty of the COVID-19 pandemic. But what does the ERC look like in 2023?

erc tips 2023

In this blog post, we'll explore where the ERC stands this year, how it can still benefit businesses and what actions companies can take to claim the credit retroactively.

The Origins and Evolution of the ERC

The ERC entered the scene in March 2020 as part of the CARES Act. By incentivizing companies to retain staff, the ERC aimed to limit pandemic-related job losses.

Initially, the ERC provided a 50% credit on up to $10,000 of wages per employee for businesses impacted by shutdowns or significant revenue loss. As the pandemic's economic disruption continued, Congress repeatedly expanded and extended the tax credit.

The credit percentage grew to 70% of qualified wages in 2021, while the maximum per employee jumped to $10,000 per quarter. These enhancements significantly increased the potential value of the ERC to struggling businesses. The credit remained available through the end of 2021.

Leveraging the ERC Retroactively in 2023

Today in 2023, businesses can no longer claim the ERC on current payroll expenditures. However, the door has not closed completely on realizing savings from this tax credit.

Companies still have until 2025 to file amended returns for qualified wages paid in 2020 and 2021. So while the ERC has been discontinued prospectively, retrospective opportunities remain available through careful tax planning.

Careful examination of previous payroll and financial records can uncover significant credits. With strategically amended returns, companies can secure major tax savings from this powerful relief measure.

Maximizing Your Retroactive ERC Benefits in 2023

The ERC train has left the station when it comes to 2023 wages. However, businesses still have a major opportunity to benefit from this tax credit by amending 2020 and 2021 returns. Follow these tips to make the most of the ERC retroactively:

  • Brush up on all eligibility rules: Master the qualification details around operational suspensions, revenue declines and other intricacies for both 2020 and 2021. Mistakes could leave credits on the table.
  • Organize documentation: Track down payroll records, financial statements and any other paperwork that supports your figures. Meticulous archives make for accurate filings.
  • Lean on the experts: ERC planning and amended returns are complex. Tax pros will help review records, run calculations, maximize credits legally and file them properly.

Don't Leave Money on the Table

At Engineered Tax Services, we’re ready to ensure you maximize these credits before it's too late. We'll dig deep into your records, run the calculations, ensure full compliance and identify every qualifying dollar.

The window for ERC retroactive claims is closing rapidly—don't delay! Contact ETS today to map out your ERC game plan. Our experts will handle this complex process from start to finish.

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Engineered Tax Services

Engineered Tax Services

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