How To File Your Employee Retention Credit

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Due to the fact that government regulations and rules are constantly changing, this can make it difficult when it comes to filing important documents.

Employee Retention Credit (ERC) was created under the Economic Security (CARES) Act and Coronavirus Aid Relief to help employers in keeping staff on the payroll

The ERC provides small and medium-sized companies with the chance to collect around 50% of the qualifying salaries paid from March 13, 2020, through to the end of 2021.

Thus, if you experienced any hardship during these times you could file for employment retention credit.

Read on to learn more about employee retention credit, and you file for it.

Why was the employee retention credit created?

Only 4% of small business owners are aware of the ERC program, reported by the National Federation of Independent Business (NFIB). Yet, companies can greatly profit from this unknown assistance.

How To File Your Employee Retention Credit

Given employee retention becoming such a prominent concern, the government is aware that you'll still need to be capable to pay your employees.

The ERC acts as a lifeline which assists businesses, eligible employers, and their staff members. It helps them in surviving the tsunami of unanticipated events that have slammed into them during the past few years.

Who is the employee retention credit aimed at?

As mentioned above, the employee retention credit is aimed at all businesses who have struggled through 2020 and 2021

With this being said, it is a much more valuable lifeline for smaller and medium-sized businesses, as they will have struggled the most during these times. 

Bigger companies may not find much success with this grant, since they will have fewer issues with money and keeping most of their staff during trying times.

In fact evidence has shown that this grant is ideal for any newer or small business that are still trying to get up and running. 

Claiming employee retention credit

Employers must submit Form 941, to the IRS in order to be eligible for the Employee Retention Credit. Each employee will receive a credit equal to 50% of the qualifying salary they received through the end of 2021. 

We advise speaking with an ERC Assistant to determine your eligibility and for additional details on how to submit an application for employee retention credit.

It is also worth noting that companies may still submit applications to obtain the employee retention credit until 2024 in order to receive a refund.

How to qualify 

Employers need to have suffered a disruption in business operations or a decline in gross receipts to qualify for the ERC credit. Employers also need to have kept their staff at pre-pandemic levels.

Since you don't need to demonstrate a loss in revenues to receive an ERC grant, unlike PPP loans. Virtually all enterprises are eligible for them even if they don't have a decline in revenues.

Steps to take for filing for employee retention credit

Businesses must submit an IRS tax credit application before claiming the ERC tax credit, also known as form 941. 

Steps to take for filing for employee retention credit

Businesses will be required to submit basic details and information concerning their organization and personnel, as well as proof that the epidemic has affected them.

After reviewing the application, the IRS will decide if the business qualifies for the credit. The reimbursement will be applied to upcoming payroll taxes if authorized.

Thus, the ERC can give companies that are having trouble retaining workers much-needed financial relief. 

Important tips to keep in mind

Be sure to carefully research and satisfy all eligibility requirements prior to submitting your ERC application. 

To achieve this, make sure you have the appropriate records of any decreased gross income resulting from partial or complete closures 2020 and 2021.

Also, keep track of employee salaries and incentives, as you will also need to show that they received qualifying earnings during this time. 

In the end, investing effort now in gathering relevant data will pay off in the long term

Hence, if you are asked to provide extra information to back up your claim, you already have it on hand. This will then make the application process run much more smoothly and hopefully take less time to complete. 

How much is employee retention credit?

Depending on the wages, as well as other costs company owners have spent during the qualifying period, the ERC is reimbursed in the format of a grant. You could be reimbursed up to $26,000 per employee, with $11,000 being the average.

How far back can you claim?

Salaries paid following March 2020, but before January 2021, are eligible for the ERC. Although, these dates are subject to change, and qualification requirements are subject to change as well. 

Employers need to have experienced a large decline in gross receipts or faced a partial or complete shutdown as a result of a COVID-19-related obligation in order to be eligible.

How long will you wait for the refund?

The IRS's most recent information indicates that applications that have already been submitted could anticipate receiving a reimbursement 6 to 10 months after the date of submission

How long will you wait for the refund

Businesses who meet the requirements for the ERC, but would desire to earn their compensation sooner than six to ten months, may be qualified for a business loan as a type of ERC early payment. 

After the IRS has successfully verified the incentive, you will be notified.

Is ERC considered taxable income?

For employees, the ERC isn't regarded as taxable income. Employees will therefore not be required to pay any extra taxes on ERC-covered wages. The ERC is regarded by employers as a company expense that can be used to reduce taxes due. 

The ERC is a beneficial tax relief provision for both businesses and employees, and it can aid in keeping essential employees in these challenging times. 

If you think you qualify for this grant then you shouldn’t delay in filing as the deadline is April 2024, as it can take up to a year for the application to be accepted.

Are all types of employees eligible for the credit?

For businesses with fewer than 100 full-time workers, the ERC tax credit is available to all full-time workers

Although, for all businesses with more or less than 100 full-time workers, only wages paid after March 12, 2020, and before January 1, 2021, can be regarded as qualified wages.

Employee retention services

To be able to file for employee retention credit, you may wish to use one of the following services. They can help the whole process be a lot easier, and can help solve any issues that you could come across. 

You can complete the process via the IRS yourself. However, using one of these companies may help you get more money and streamline the entire process.


The ERC specialists at Aprio are considered leaders in COVID-19 relief policy across the country.

The team has committed ERC advisors leading the front in enlightening the public and guiding customers toward the greatest COVID-19 alleviation benefits.

Since they have vast experience, Aprio's committed ERC and PPP advisers are able to manage the complexity and adhere to the laws.

More than 50 COVID-19 relief program experts on their staff are regularly informed of the most recent developments from the Treasury, SBA, Congress, and the IRS.

ERC Assistant

The onboarding of clients and the submission of claims can both be completed quickly—in as little as 1-2 weeks—by ERC Assistant. 

ERC Assistant examines your company's eligibility for the ERC Program, the amount you ought to earn, and any other technical details that can crop up in this otherwise complicated procedure.

You won't need to be concerned about navigating it on your own because ERC Assistant's specialists are at your side. 

Any ERC queries you may have will be addressed, and they will walk you through the process of maximizing the claim for your company.

ERC Today

ERC Today is a service that assists businesses in determining their eligibility for employee retention credit. This company can guide you through the entire process. 

ERC Today

From easy data collection, credit calculation to figure out the precise amount of the credit you are eligible to receive from the IRS, and assistance with amending returns. 

Due to their experienced services, free consultations, complete IRS compliance, low upfront expenses, and extraordinarily high success rates, ERC Today has benefited businesses of all sizes.

Final thoughts

If your business struggled during 2020 and 2021, then you may still be able to file for the employee retention credit via the IRS using Form 941. This credit is paid as a form of a grant, which is based on the wages of your staff. 

The main goal of this credit is as the name suggests to help smaller businesses to retain as much of their staff as possible during those difficult times.

You have until April 2024, to file your employee retention credit forms if you wish a refund of the wages paid in those times

We hope this article has been hopeful. Now you know how to file your employee retention credit.

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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