Posted By PayNW March 22, 2023
In order to help businesses recover and manage their workforce through the COVID-19 Pandemic, the government created the Employee Retention Credit Act (ERC), a tax credit employers could receive for retaining employees through the pandemic. Here is what businesses need to know about ERC in 2023.
Employee Retention Credit in 2023
While the Employee Retention Tax Credit (ERC) program technically ended, businesses can go back and request credits (through amended returns) for up to three years, until 2024.
Using the ERC, businesses can earn up to $26,000 per employee just for retaining them through the pandemic as well as meeting certain requirements. Generally, the ERC is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021
As of March 2022, PayNW has helped clients claim over $100 million in ERC tax credits.
2023 ERC Questions
Below are some common questions regarding the Employee Retention Credit in 2023.
Is ERC still active?
Yes. Businesses can conduct a lookback to determine if wages paid after March 12, 2020, through the end of the program are eligible for ERC credits. Eligible businesses can claim the credit retroactively.
Who is eligible and what are the qualified wages?
A business is eligible if it:
- Had fully or partially suspended their operations during any calendar quarter in 2020 due to government orders limiting commerce, travel, or group meetings due to COVID-19
- Experienced at least a 50% reduction in year-over-year gross receipts in 2020 or 20% in 2021
Qualified wages include all wages paid from March of 2020 through to December 2021, as a result of several amendments through legislation such as the Relief Act of 2021 and the American Rescue Plan Act of 2021.
If a business claims ERC, does that prevent them from claiming other credits?
Initially, businesses that received a PPP loan were ineligible. However, as of 2020, those restrictions have ended.
Is it too late to get started with claiming ERC in 2023?
Businesses can still file amended returns for the last three quarters of 2020 until April 15, 2024, and until April 15, 2025, for all quarters of 2021.
Where do people start to claim ERC?
Businesses can get started with claiming ERC credits by determining if they are eligible from a Payroll and HR company such as PayNW.
The amount of ERC tax credits that PayNW has gotten back for companies in the past few years is one statistic that every company should want to be a part of.