March 25, 2023

Whereas COVID-19 lockdowns have been lifted and restrictions eased since 2020, companies are nonetheless feeling the numerous monetary influence of the pandemic. With tax season proper across the nook, it’s an comprehensible time to weigh your choices and take into account what would possibly assist relieve the tax burden on your small business.

Though the 2020 tax yr is behind us, and also you seemingly already filed your tax return in 2021, the federal government arrange the ERC tax credit score below the CARES Act that can assist you amend your 2020 tax return, giving companies monetary reduction as a result of influence of COVID-19.

Who does the ERC Assist?

The ERC tax credit score might help companies throughout the following industries:

  • Schooling
  • Authorities Contractors
  • Healthcare and Life Sciences
  • Hospitality and Retail
  • Industrial
  • Not-For-Revenue
  • Skilled Providers
  • Actual Property and Development
  • Expertise

By the tax credit score, companies from every of those industries can apply with certified wages paid after March 12, 2020, and earlier than January 1, 2021. This tax credit score solely applies to companies with lower than 100 workers. Companies that obtained a PPP mortgage forgiveness can’t use the identical wages to use for the ERC tax credit score.

Along with having lower than 100 workers, companies qualify for the ERC tax credit score in the event that they fall below one of many following standards:

  1. Certified wages had been paid to workers throughout a full or partial suspension of enterprise operations between March 12, 2020, and January 1, 2021
  2. Gross receipts declined over 50% when in comparison with the identical fiscal quarter of the yr prior (2019)
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If you happen to fall below certainly one of these standards, calculate your ERC quantity to find out how a lot you might obtain.

I Already Filed My 2020 Tax Return. What Now?

If you happen to filed your 2020 tax return again in 2021, no downside. That doesn’t imply you’ll miss out in your ERC tax credit score in the event you qualify. As a result of you’ve got already filed, you’ll need to amend your 2020 tax submitting. This can assist you to make adjustments to your 2020 tax return that will influence your ERC tax credit score. In most cases, the IRS permits you to amend your tax return 3 years after submitting.

The earlier you file your amended tax return for the 2020 tax yr, the higher. Though the deadline for making use of for the ERC tax credit score just isn’t till April 15, 2024, you need to get your utility in as quickly as attainable.

Delays have plagued the ERC claims standing of already-filed purposes, inflicting the typical estimated arrival of your declare to be between 6-9 months. Nonetheless, the variety of months you wait is admittedly dependent upon the knowledge introduced in your utility and whenever you submitted it. For that reason, having an ERC marketing consultant show you how to full and file your utility can get you your declare sooner.

Amend Your 2020 Tax Submitting

Amending your 2020 tax submitting permits you to right errors that you just might need made to be able to obtain the ERC tax credit score. You have to to amend your Quarterly Federal Tax Return for every of the quarters you paid certified wages. To amend your tax submitting, it’s best to seek the advice of with an ERC consulting agency to keep away from making any errors that would influence your ERC declare. You do not need to be caught paying penalties to the IRS due to errors you made when submitting.

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