What Is The Employee Retention Tax Credit Deadline for 2022?

January 20, 2023

The Employee Retention Tax Credit (ERTC) is a lifesaver for many businesses surviving the COVID-19 pandemic.

This tax incentive is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020.

The ERTC is available to eligible employers to claim for employee wages paid between March 12, 2020 and January 1, 2021. Making it one of the most effective ways for businesses to save money and keep their employees.

In order to be eligible for the ERTC, employers have to meet certain criteria:

First, they must have experienced either a full or partial shutdown due to a COVID-19-related mandate.

They must have experienced a significant decrease in gross receipts compared to the same quarter in the previous year.

If a business is eligible for ERTC, employers could receive a tax credit equal to 50% of the qualified wages paid. With a maximum credit of $5,000 per employee per year.

How do you calculate the Credit amount for your business?

To calculate the ERTC, first determine the number of eligible employees and the total amount of qualifying wages paid to those employees during the relevant calendar quarter.

Qualifying wages are capped at $10,000 per employee for all quarters, with only 50% of those wages counting towards the credit.

For example, An employer has 10 eligible employees and pays each employee $10,000 in qualifying wages during a quarter. the employer is entitled to a credit of $50,000 ($10,000 x 10 employees x 50%).

When is the Employee Retention Credit Deadline for 2022?

The Employee Retention Credit provides financial support to businesses during the COVID-19 pandemic.

This credit is available for most businesses until September 30, 2021, with a deadline of December 31, 2021 for certain businesses to pay qualified wages.

This means that businesses have the opportunity to claim the credit as a tax return for qualified wages and certain health insurance costs paid to employees.

However, the opportunity to claim the retention credit retroactively is still available for businesses. The deadline for having filed amended returns for Q2, Q3, and Q4 of 2020 is April 15, 2024.

The deadline for for all 2021 quarters is April 15, 2025.

This extended timeline allows businesses to claim the ERTC tax return if they did not do so initially, provided they meet the eligibility criteria.

The Inland Revenue Service (IRS) has provided guidance on how businesses can claim the ERTC retroactively in Notice 2021-20 on its website.

The CARES ACT Expansion of Eligibility for ERTC Tax Credit

The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the eligibility criteria to include more businesses.

This broader eligibility will help more businesses access the ERTC credit, which can offset the costs of retaining employees.

Additionally, the CARES act enables businesses to carry forward any unused employee retention credits from 2020 into 2021.

The goal of these changes is to every small business in keeping their doors open and their employees on their payroll, despite the ongoing challenges posed by the pandemic.

How To Apply for Employee Retention Credit after 2022

The initial step in the ERTC tax credit application process is to understand its qualifications.

The next step is to file the amended payroll tax return.

For businesses that file quarterly, use Form 941-X, while those that file annually should use Form 944-X.

The process of filing amended employment tax returns can be complex. Here's how to easily apply for the ERTC tax credit after 2022:

  1. Verify ERTC Eligibility by completing the online pre-qualification application. The application will ask questions about the number of employees you had in 2019 and if your revenue declined or if your business was impacted by COVID-19.
  2. Provide basic business information such as name, address, and contact person. Additionally, you may need to include details about your payroll software and payroll provider or accountant.
  3. Upload a Payroll Report. You need to upload a payroll report that shows the amount paid and taxes withheld for income and payroll taxes.
  4. Submit Employer Tax Returns To claim the ERTC tax credit. Upload the original copies of your employer tax returns.
    Most employers use Form 941, while small employers who pay less than $1,000 in payroll tax annually use Form 944. Farmers and fishers may use Form 943.
  5. Mention PPP Loan Receipt If you received a Paycheck Protection Program (PPP) loan to cover expenses during COVID-19. Receiving a PPP loan does not disqualify you, but you cannot get the credit for wages paid using the loan.

What Basic Business Information Should You Provide?

To apply for the Employee Retention Credit (ERTC), you need to provide the following basic information about your business:

  1. Business name and address
  2. Contact person details
  3. Information about your payroll software and payroll provider or accountant (if applicable)
  4. Payroll reports that show how much you paid your employees and how much was withheld for income and payroll taxes
  5. Copies of your original employer tax returns, which you need to amend to claim the ERTC.
  6. Information about any Paycheck Protection Program (PPP) loans you received.