If you are a small business that paid wages to employees during the COVID-19 pandemic, you may still qualify for a tax credit. The Employee Retention Credit is a tax credit established under the CARES Act to help businesses recover financial losses from the 2020 and 2021 tax years. Although it is 2023, business owners can still apply for the tax credit until April 15, 2024 for the 2020 tax year and April 15, 2025 for the 2021 tax year.
Because of a surplus amount of applications being handled by a small group of ERC experts at the IRS, it may still take a while before you receive the credit. The tax credit comes in the form of a tax credit or refund and can be used to help businesses pay wages, cover business expenses, and more. Due to delays, you do not want to wait until the deadline to apply. Even now, you may have to wait up to nine months before your application is approved.
How Much Can My Business Earn?
Businesses can receive up to $21,000 per employee through the ERC tax credit. This is a significant amount that could help plenty of small businesses still feeling the financial weight of the COVID-19 pandemic. The amount your business earns for 2020 is 50% of qualified wages, while it is 70% of qualified wages for 2021.
To see how much your business could earn from the ERC tax credit, use an ERC calculator to help you figure out the amount before filling out your application.
How Do I Know My Consultant Is Qualified?
A word of warning: there are a lot of companies claiming to be ERC consultants that are trying to scam businesses out of their money by offering fake services. To ensure that your ERC consultant is qualified, it is best to go with a reputable consulting company. A reputable ERC specialist often has a background as a certified tax attorney or experienced tax consultant. You can even look them up in a certified tax professional database to verify their credibility before hiring them for ERC consulting services.
With previous experience handling taxes for the IRS, your ERC consultant will understand how to navigate the application process and ensure that you have everything you need to get approved. They can also help you avoid common mistakes that could result in an audit from the IRS.
What Does an ERC Specialist Do for Businesses?
An ERC specialist helps businesses get in line with the IRS faster, so all you are waiting on is approval directly from the IRS. They can guide you through applying to the ERC tax credit from start to finish, making it much easier to file your application. This can help you receive faster financial relief from the pandemic while avoiding anything that could delay the process further, such as an incomplete application or inaccurate information on your application.
ERC specialists can also make sure that no qualifying wages are left untouched, so you can maximize the benefits of the ERC tax credit application, ensuring that you make the highest profit possible.