The Employee Retention Tax Credit (ERTC) was established by the U.S. government in 2020 to help struggling businesses affected by the COVID-19 Pandemic. While the ERTC program ended on Sept. 30, 2021, businesses are still able to claim this refundable tax credit retroactively to March 12, 2020.
Here’s what you need to know:
What is the ERTC?
The Employee Retention Tax Credit (ERTC) is a tax credit that business can claim on qualified wages paid to employees. It was created by congress in March 2020 for small businesses to provide financial relief during the pandemic. It’s intended for companies that lost revenue in 2020 and 2021 due to the pandemic.
Who qualifies for ERTC?
- Small businesses who were operating partially or were fully suspended due to the government orders following the COVID-19 outbreak
- Businesses which saw a decline in percentage of gross receipts compared to the previous year (for example, 2020 vs. 2019 or 2021 vs. 2020)
- Recovery startup businesses that began after February 15, 2020.
Do these funds have to be paid back?
These funds do not have to be paid back. The credit is based on payroll taxes that were already paid by an employer.
When do applications for the ERTC credit end?
Businesses have until the end of 2025 to file amendments to their 2020 or 2021 tax filings. They have three years to file for the tax credit.
Who can assist you with filling out required documents?
You may talk to your accountant or payroll preparer about the ERTC to determine if your company qualifies. Paychex.com, one of our business solution partners, provides a service that assists business members with preparing documents and filing the amendments to the IRS.*
Travis Credit Union Business Services can help manage your company’s payroll, merchant card, tax, bill payments and other services. Visit our Business Services page to learn more.
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*Travis Credit Union does not provide personal or business tax advice. Please consult your tax consultant for information about ERTC. TCU is not responsible for any information found on Paychex.com.