ERC: If You Haven't Claimed It, You Might Be Missing Out on Big Dollars

Published on: Jun 17, 2022 by Eric Trost, CPA, MST

Updated on: August 8, 2024

You have probably heard of the Employee Retention Credit and maybe you thought you didn’t qualify. Think again.

Take the simple test.

You might be missing out.

Employee Retention Credit (ERC)

The Employee Retention Credit (ERC) is a tax break that has been modified and extended since it was originally enacted.

Originally, there were restrictions regarding taking the credit if you also received a PPP loan and the sales decline was more restrictive (50% decline in sales in a given quarter). Those parameters have changed.

Here’s a Simple Test To See If Your Business Qualifies:

1. Compare each of the first three quarters of sales in 2019 to the same quarter in 2021. If the sales totals declined by at least 20%, you have passed the simple test for eligibility.
2. The credit allows up to $7,000 per employee, per quarter of eligibility.
3. Let’s do the math:
1. Your sales declined in the first, second, and third quarters of 2021 as compared to 2019.
2. You have 10 employees.
3. 10 employees x $7,000/employee x 3 quarters = $210,000

That’s a significant amount of dollars you could be missing out on. There is still time to amend your previous tax returns to include this credit. Even if you thought you couldn’t claim it originally, you might be able to now.

For more details on the ERC credit, check out this Biz Tip:

RELATED CONTENT: BIZ TIP

ELIGIBLE BUSINESSES: CLAIM THE EMPLOYEE RETENTION TAX CREDIT

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Eric is a Principal with SVA Certified Public Accountants with vast experience and technical knowledge in tax compliance, research, and planning. He assists corporations and partnerships with tax savings through transaction structuring, tax credits and accounting methodology. He works closely with businesses to plan their cash flow for tax liabilities through quarterly estimate planning.

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