The Employee Retention Credit (ERC) was included as part of the CARES Act of 2020. It encouraged business owners to keep employees on the payroll by providing them with a refundable tax credit for eligible employee wages paid. This credit was available in both 2020 and 2021, but can you collect it in 2022? Keep reading to learn more about the ERC, applicable date ranges, and whether or not you can still claim this credit for your business.

When Was the ERC Available?

The Employee Retention Credit was first made available in March of 2020, when the CARES Act was signed into law. Initially, this credit was intended to only last through the end of the year. However, it was extended twice: first via the Consolidated Appropriations Act, and then through the American Rescue Plan. Under all three of these different plans, the ERC offered different credit amounts to business owners:

  1. CARES Act (March 12, 2020—December 31, 2020) – Under the CARES Act, the ERC offered businesses a refundable credit against 50% of qualified employee wages, and a maximum annual credit of $10,000 for each employee.
  2. Consolidated Appropriations Act (January 1, 2021—June 30, 2021) – The Consolidated Appropriates Act allowed employers to receive the ERC for two additional quarters, with a credit for 70% of qualified wages, and a maximum of $10,000 for each qualifying employee per quarter.
  3. American Rescue Plan (July 1, 2021—December 31, 2021) – The ARP schedule the ERC to be sunset in September of 2021, but some businesses remaining eligible for the credit through the end of the year. In this period, businesses could claim a credit against 70% of qualified wages paid, with a maximum of $7,000 in credits per quarter for each employee.

It’s important to know these percentages and maximum credits when determining how much you can claim in past credits, which leads to our next important point.

Can You Claim It in 2022?

The answer to this question is both no and yes. No, the ERC is no longer available for 2022, so you cannot claim any new credits for retaining employees this year. However, if you did miss out on claiming any credits in the above date ranges, you can still claim those credits this year. For example, if you extended your business tax return and have not yet filed it, you can claim the ERC when you file your return (which would be due by the 15th of September).

But what if you already filed your return? You can still amend any business return to claim the missed credits. Many business owners missed out on the ERC because they believed they did not qualify for it after receiving a PPP loan. While this was initially true, that limitation changed, and business owners can now claim an ERC for all applicable quarters by amending their past returns, regardless of whether or not they received a PPP loan.

How Do You Know If You Qualify?

But how can you determine if you actually qualified for the ERC during these date ranges? This credit was made available to all private sector businesses, as well as 501(c) organizations, hospitals, and colleges/universities. Your eligibility is based on your ability to show a measurable negative impact on your business due to the pandemic. To do this, you will need to compare your gross receipts in each of the quarters mentioned above to the same quarter in 2019. If your gross receipts for the pandemic years are less than 50% of what they were pre-pandemic, you qualify for the ERC, unless your gross receipts for the next quarter are 80% of what they were pre-pandemic.

Get Help Claiming Your ERC

If you believe that your business was seriously impacted by the COVID-19 pandemic, your Employee Retention Credits for both 2020 and 2021 are still available to you, so long as you did not claim them when filing that year’s tax return. If you have questions about how to calculate your gross receipts and ensure you qualify, our experienced tax accountants here at Peter Witts, CPA, can provide you with the guidance and help you need. Contact us today to schedule a consultation.