If you are an eligible employer ready to claim your Employee Retention Credit (ERC) for the years 2020 and 2021, you have a few options available to submit your claim. Let’s take a closer look at three methods to claim your ERC and how to move forward to obtain the tax credits your business deserves.

Are You Eligible for the Employee Retention Credit?

Ensuring you qualify for the ERC is a crucial first step in the claims process. The government has set very clear guidelines for ERC eligibility. Two different qualifiers are making you eligible:

  1. Your business experienced a full or partial operations suspension resulting from a government order during the COVID-19 pandemic.
  2. Your business’s gross receipts significantly declined—for 2020, below 50% of the comparable quarter in 2019; for 2021, below 80% of the comparable quarter in 2019.

How to Submit a Claim for the ERC

Once you know you are eligible, you can begin the claims submission process. There are three methods by which you can claim the benefit:

Method #1: Fill Out the Advance Credit Request Form 7200

This form allows you to submit a request for an advance credit based on the wages you paid in 2019 and the wages you anticipate paying for the current calendar quarter.

Method #2: Reduce Your Business’s Federal Payroll Tax Deposits

If you anticipate an ERC for the current calendar quarter, you can immediately take advantage of the credit by reducing your payments to the Electronic Funds Tax Payment System (EFTPS) by the amount of your anticipated credit. Then, at the end of the quarter, use Form 941 to reconcile the credits and tax liability.

Method #3: Amending a Previously Filed Tax Return

The most common way businesses claim their ERC tax benefit is by amending their previously filed tax Form 941 using Form 941-X. You will typically have a three-year statute of limitations to file Form 941-X. After amending the return, the IRS processes the credit and applies it as an overpayment on your tax account. You can then use the credit against withholding returns for future years or request a refund for the overpayment.

Turn to Verity Tax Credits for Expert Assistance with Your ERC Claim

Verity Tax Credits, LLC, brings more than two decades of credit and incentive experience to your business’s ERC claim. We are knowledgeable in the Federal Employee Retention Credit and can walk you step by step through the process. In addition, our team assists companies of all sizes and industries to claim credits they may have been missing.

Count on us to help you identify the maximum tax savings and follow the necessary steps to achieve a successful claim. Schedule a 20-minute call with Verity Tax Credits, LLC, to learn how to claim your Employee Retention Credit and optimize your tax credit situation.

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