Employee Retention Credit FAQs

Will I need to repay the ERC Credit?

No, you won’t, as it is not a loan. It’s a refundable tax credit, so when your ERC service files your claim for an ERC, they will ask for a refund check for you.

 

Can I apply for ERC if my business or organization is a NON-PROFIT?

Yes. Non-profit organizations, including charities and religious organizations, are eligible to claim the ERC if they meet the eligibility criteria (which is the same criteria as for-profit businesses).

 

How much do ERC preparation and filing services charge?

They all charge based on a percentage of the credit recovered for your business. The percentage they charge varies, from 15% to 25% usually.

 

Why not just have my own CPA accountant prepare and file for my business?

The difficulties arise because the ERC credit is based on your company’s payroll returns and not its income tax returns. The ERC tax code itself covers over 200 pages and most CPAs do not have the time or experience to maximize their client’s ERC recoveries. This is the biggest reason why this credit is so underutilized…..few CPAs are able to effectively process the credit.

 

Can my business get ERC Funds if it previously took out a PPP loan?

Yes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 allows a company to have had a PPP loan and still take advantage of the ERC credit. But your business cannot use the same dollar for dollar funds.

 

My business’ revenues increased in 2020. Can I still qualify for the ERC program?

Yes. Please refer to Will My Business Qualify for this and other qualification criteria.

 

Will the ERC funds expire?

Tax refunds are issued by the US Treasury, so eligible employers will receive the funds they qualify for. Businesses have until April 15 of 2024 to submit an amended return to claim the ERC Credit for 2020, and until April 15 of 2025 to submit an amended return to claim the ERC Credit for 2021.

 

Can I get more in an ERC Credit than I paid in taxes?

Recall from above that the ERC program relates to payroll taxes paid, not to income taxes. Any ERC funds that are not applied to payroll taxes your business owes are treated as an over-deposit of payroll taxes, and will result in a refund check being issued by the IRS.

 

I am a business owner. Will my wages, or the wages of any family member I employ, qualify?

Wages of the owners of a business who have majority ownership, defined as greater than 50%, do not qualify. W2 wages of any immediate family members of the owner also do not qualify. But if the owner has less than 50% ownership, their W2 wages do qualify, as will the W2 wages paid to their immediate family members.

 

Can I qualify for the ERC if I’m self employed?

No, because you are majority owner (over 50%) of your business, your wages will not qualify.

 

How long will it be before I receive my ERC Credit?

This process usually works as follows: you send the ERC service provider the required payroll documents. Using the documents, it will prepare the forms for submission to the IRS, usually within 2-3 weeks. After you approve and sign the forms, they will submit them to the IRS for processing. Once filed with the IRS, refunds are released based on the IRS’ backlog at the time. At present, the IRS has stipulated a 20-week minimum turnaround on the ERC refunds, although some refunds are issued both earlier than and later than the 20-week period.

 

Is the ERC Credit taxable?

The ERC credit will not be considered income for federal income tax purposes. Importantly though, your business must reduce any deductible wage expenses by the amount of the credit you receive. You should provide the ERC credit information to your business’ CPA for income tax purposes.