2023's Most Frequently Asked Questions: Employee Retention Credit and ERC Benefits

The past few years have seen challenging times for small businesses due to the emergence of Covid19 pandemic. Several companies were impacted by these times severely, and many were forced to shut down as they could no longer afford their employees' payroll and other operational expenses. Thus the government introduced the Employee Retention Credit scheme as a relief program to help small-scale businesses sustain their operations. Several companies in the USA have already enjoyed the ERC benefits, and many are still working on claiming this credit from the government to get back on their feet.

Many questions arise as businesses are still eligible to apply for this ERC credit in the year 2023. Today, here we will try to answer most of the fundamental Frequently Asked Questions that will help you easily claim ERC credit. Read on to learn more about it.

What exactly is the Employee Retention Credit (ERC) program?

The Government established the Employee Retention Credit as a Coronavirus Relief Fund for small businesses. It is a nonrefundable tax credit under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This program was executed to help companies preserve their workforce while managing their operations during hardships due to Covid 19. So employers who take advantage of this program can easily manage their payroll and other employee compensation expenses.

Are there any differences between ERC and ERTC?

No! These both are acronyms for the same scheme established by the Federal Government. ERC means Employee Retention Credit, while ERTC stands for Employee Retention Tax Credit. So, no matter under what name you file for claiming this tax credit, you will be eligible for ERC benefits.

What are qualified wages for ERC credit?

The wages your business will have paid to the employees as their payroll or other compensations will be included in the qualifying wages for ERC credit. However, you must include only those wages surpassing the amount you have received under the PPP funding. Also, the refundable tax credit should be more than the payroll taxes paid by an employer.

Do you include your part-time employees under the ERC relief program?

There are no restrictions on including your part-time employees in the ERC credit scheme. Employers will only have to consider calculating their credits based on the first $10,000 paid as wages or healthcare compensations to the employees.

Are you eligible for ERC benefits if you have sold your business?

You will be eligible to claim ERC benefits if you were still your business owner during the qualifying period and you meet the IRS requirements. There will be no ERC credit allotment for those periods when you transferred ownership to another entity. 

Do you qualify for ERC if your business revenue has recently increased?

Yes! Your business will qualify for ERC even if your revenue has increased during 2020 or 2021. One thing is mandatory to consider for qualifying with increased wages. Due to government regulations, your business operations must have undergone partial or full suspension during those periods.

What is the deadline for claiming the ERC credit?

If you are trying to claim ERC benefits for the eligible periods of the year 2020, you will have to apply for them before April 15, 2024. The deadline to claim ERC credit for the 2021 qualifying periods is April 15, 2025. 

Do you need to pay back the ERC credit to the IRS?

ERC credit has been established as an entirely refundable tax credit instead of a loan. So there will be no need to return it to the IRS as it is a no-return fund.

Wrapping Up!

We hope we have covered most of the questions restricting you from claiming your eligible ERC Credit. However, if you still need clarification about this scheme or assistance claiming ERC benefits, contact an expert from Claim ERC Credit, the ERC credit company.