Modifications made to the expanded Employee Retention Credit (ERC) were designed to allow more businesses paying employees while experiencing pandemic-related hardships to benefit. While the credit is extended through December 31, 2021, now is the time to focus on claiming your Q1 2021 ERC, which must be claimed on your Q1 payroll returns due April 30, 2021.
Are You Eligible for the Employee Retention Credit?
First, it’s important to understand how the credit may apply to your business. You need to determine:
- If you are eligible
- What wages qualify
- How much of the employee retention credit you can claim
- How a PPP loan may affect the credit
>> Review our Employee Retention Tax Credit Flow Charts for 2020 and 2021 Quarters
How Do You Claim the Employee Retention Credit?
Once you know you the ins and outs of the ERC, how do you claim it?
You will need to report qualified wages on your quarterly employment tax return, Form 941, starting with your April 30 filing. It’s important to know that, as an employer, your share of social security tax will be reduced by the computed credit, and any excess credit will be refundable. Rather than receiving a refund, you may retain a certain portion of all other employment taxes that would have otherwise been deposited.
While determining your eligibility and/or what qualified wages you can claim can be complex, your tax advisory team knows your business and can help you navigate, and maximize, the ERC.
Contact Jon Williamson at firstname.lastname@example.org or a member of your service team to discuss this topic further.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.