Which Quarters Are Eligible For ERC?

Are you wondering which quarters are eligible for the Employee Retention Credit (ERC)?

This tax credit was created to help employers retain their employees during the COVID-19 pandemic.

Most businesses were eligible for three quarters of 2020 and three quarters of 2021, with a potential tax credit of up to $5,000 per employee.

To qualify, employers must have experienced a significant decline in gross receipts or been forced to suspend operations due to government orders.

Learn more about the ERC so you can take advantage of this valuable tool and help your business remain viable during this difficult time.

2020 Quarters

For 2020 and 2021, six quarters were eligible for the ERC – that’s a lot of opportunities to save! Specifically, in 2020, you had three quarters to qualify for the ERC: Q2, Q3, and Q4. In 2021, you had another three quarters to qualify: Q1, Q2, and Q3. So if your business was affected by COVID-19 at any time during this period, it could be eligible for a tax credit.

It’s important to remember that different businesses have different qualifications when it comes to the ERC. Most businesses must have suffered a decline in gross receipts of 20% or more compared with the same quarter in 2019 in order to be eligible. But certain industries like air transportation are subject to different rules.

No matter what industry you’re in or which quarter you apply for though, it pays off to look into the details as there may be additional credits available such as employee retention credits and paid sick leave tax credits that can benefit your business even further. It’s worth doing some research so that you can take full advantage of all of these savings opportunities!

2021 Quarters

You can receive the Employee Retention Credit for three quarters in 2020 and three quarters in 2021. This means that businesses, depending on when their ERC began and ended, will be eligible to receive a credit for up to six quarters total.

For 2020, the ERC began on March 13th so Q2, Q3, and Q4 are all eligible.

For 2021, the ERC ended on September 30th for most businesses so Q1, Q2, and Q3 are all eligible.

The amount of the credit is generally equal to 50% of qualified wages paid up to $10,000 per employee. The credit applies against applicable employment taxes with any excess refunded as part of an employer’s quarterly payroll tax return filing.

Businesses must apply for the credit each quarter It is available by filing a Form 941 or Form 7200 with their payroll processor or through IRS’s “E-File” system.

It is important to note that certain eligibility requirements must be met before claiming this credit including having operations partially or fully suspended due to governmental orders due to COVID-19 or a significant decline in gross receipts (at least 20%) from one quarter compared to 2019 results.

In addition, employers are not allowed to claim both the PPP loan forgiveness and Employee Retention Credit during the same period of time as specified by IRS rules (which have recently been updated).

Employers should speak with a tax professional if they have any questions about which quarters may be eligible for ERTC credits based on their specific situation and review all relevant information provided by the IRS before submitting claims related to ERTCs.

Qualifying Criteria

To qualify for the Employee Retention Credit, you must meet certain criteria. These are the four eligibility requirements:

  1. Your business must have been impacted by government orders related to COVID-19. Your business must have experienced a significant decline in gross receipts of at least 20% when comparing one quarter to the same quarter in 2019.nn3. For 2020, your business must be able to show that it experienced either a full or partial suspension of operations due to those orders between March 13 and December 31, 2020, OR had an eligible decline in gross receipts during any calendar quarter in 2020 compared to 2019.
  2. For 2021, your business must be able to show that it experienced either a full or partial suspension of operations due to those orders between January 1 and September 30, 2021, OR had an eligible decline in gross receipts during any calendar quarter in 2021 compared with 2019.

The ERC is meant to provide businesses with much-needed relief during this difficult time so they can continue operating and supporting their employees while navigating the effects of COVID-19 on their industries and communities. To learn more about how you can take advantage of this opportunity for your business, visit [link].

Application Process

Navigating the application process for the Employee Retention Credit can help your business receive much-needed relief during this difficult time. The ERC is available to employers who have been financially affected by COVID-19, making them eligible for a refundable tax credit of up to $7,000 per employee.

To apply, you’ll need to fill out Form 941-X and file it with your quarterly Form 941. You’ll also need to include documentation that verifies how your business was impacted by COVID-19 in order to qualify.

The application period for the ERC runs from March 13, 2020, through September 30, 2021, for most businesses. This means you may be eligible for tax credits on wages paid between Q2 of 2020 and Q3 of 2021 if you meet all other criteria set by the IRS. If approved, the credit will be applied when filing taxes either as a reduction in payroll taxes or as a direct refund from the IRS itself.

It’s important to note that some employers aren’t eligible for the ERC, including those receiving Paycheck Protection Program (PPP) loans or other government assistance related to COVID-19, such as Economic Injury Disaster Loans (EIDLs). Additionally, any employer who has already taken advantage of deferring their payroll taxes isn’t eligible either.

Keep in mind that filing Form 941-X requires careful consideration and accurate reporting, so it’s best to consult with an accountant before submitting anything. Doing so can ensure all necessary documentation is included and that everything is filed correctly so your business can receive its rightful relief under the ERC program quickly and efficiently during these tough times.

Tax Credits

Gaining access to up to $7,000 per employee in a refundable tax credit through the Employee Retention Credit (ERC) program can be a much-needed lifeline for businesses hit hard by COVID-19, giving them hope that they’ll make it through these difficult times.

The ERC is available for employers who experienced economic hardship due to the pandemic and are allowed for the quarters of 2020 from April 1st to December 31 as well as 2021 from January 1st to September 30.

To qualify, employers must have had either a full or partial suspension of their operations due to government orders related to COVID-19 or have experienced a significant decline in gross receipts compared to the same quarter in 2019.

Eligible wages paid out during those eligible quarters will receive 50% reimbursement on wages up to $10,000 per employee for 2020 and 70% reimbursement on wages up to $10,000 per employee for 2021.

Companies with 500 or fewer employees are eligible as well as self-employed individuals and sole proprietorships.

The ERC gives businesses much-needed breathing room while they wait out this pandemic and its resulting economic hardships. It enables companies that may not be able to keep all staff employed during these uncertain times with some financial security until things return back normal again.

Accessing this tax credit is beneficial but shouldn’t replace other strategies like furloughs or pay cuts if necessary; rather, it should be used as an additional tool of support so businesses can stay afloat longer while rebuilding their profits post-pandemic.

Eligible Wages

You now know which quarters are eligible for the Employee Retention Credit (ERC). The next question is: What wages qualify?

In short, only wages paid during those qualifying quarters can be used to calculate the credit amount. This includes salaries, hourly wages, and other compensation such as commissions, tips, vacation pay or other similar payments. However, it doesn’t include sick leave or family medical leave covered by the Families First Coronavirus Response Act.

All of these payments must be reported on Form 941 with taxes withheld from employee earnings. So make sure you’re keeping track of all your payroll expenses throughout the year in order to get the most out of your ERC claim!

Furthermore, employers may also use qualified health plan expenses to determine their eligible wages if they have fewer than 100 full-time employees and a significant decrease in gross receipts. Keep this in mind when calculating your ERC amount!

To recap: Qualified wages are any wages you paid during qualifying quarters that were reported on Form 941 with taxes withheld from employee earnings. Additionally, employers with fewer than 100 full-time employees may use qualified health plan expenses to figure out their eligible wages if they experience a drop in gross receipts.

With this knowledge under your belt, you should have everything you need to maximize your ERC claim!

Retroactive Benefits

Discover how retroactive benefits can help you make the most of your ERC claim and get the relief you need!

If you’ve already filed your ERC claim, you can receive a retroactive benefit for wages paid to employees during an eligible quarter. This means that if you paid an employee in a quarter prior to filing your claim, but it qualifies as an eligible quarter for the ERC, then those wages are still eligible for being claimed.

For example, if you filed your claim in Q2 2021 but had paid wages to employees in Q4 2020 that qualify for the ERC, then those wages would be considered “retroactively” eligible and could be claimed.

This is beneficial because it helps ensure employers can maximize their relief from the tax credits available through the ERC. It’s important to remember that there are certain requirements associated with retroactive benefits; make sure to check with the IRS or a tax professional if you have any questions regarding eligibility.

Don’t miss out on this opportunity – take advantage of these extra savings today!

Find Out How Much Money You Qualify For, Click Here And Fill Out the Form

Conclusion

You now know the eligible quarters for the Employee Retention Credit and the criteria for eligibility.

You also understand how to apply and what wages are eligible for tax credits.

Finally, you’re aware of the retroactive benefits available if you qualify.

With this information, you can make an informed decision about whether utilizing the ERC is right for your business.

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