The COVID-19 pandemic changed the workplace in many ways. From the prevalence of remote work to the Great Resignation and labor shortages. One significant payroll change was the introduction of the Employee Retention Tax Credit, which allows qualifying employers to claim tax credits based on the qualifying wages they paid to their employees from March 13, 2020 through Sept. 30, 2021. But tax credits aren’t forever. Read on to find out when these tax credits expire and how you can file if your business is eligible.

Does Your Business Qualify for the Employee Retention Tax Credit?

The Employee Retention Tax Credit was meant to encourage employers to maintain their workforce despite a potential loss of income due to government orders throughout the pandemic that limited commerce, travel, group meetings, and sales.

Qualifying employers include those:

• Whose business or trade was fully or partially suspended due to government orders limiting commerce, travel, or group meetings due to covid
• Who experienced modification to operations due to government orders, including a partial suspension of business operations if the required modifications had more than a nominal effect on the business operations
• That experienced a substantial decline in gross receipts
• That fall within the parameters of a recovery business startup, defined as any employer that began the business after Feb. 15, 2020 and had annual gross receipts under $1 million for the three-year period before the calendar quarter for which a credit is determined

What if We’re Eligible but Didn’t Claim the Employee Retention Tax Credit?

Whether you’ve just learned about the Employee Retention Tax Credit or forgot to include it in previous years’ returns, tax credits for both 2020 and 2021 may be claimed retroactively by filing amended payroll tax returns. Up to $10,000 per employee annually for 2020 and $10,000 per employee per quarter for 2021 can be claimed. The credit amount is 50 percent of qualifying wages in 2020 and 70 percent of qualifying wages in 2021.

When is the Filing Deadline?

Employers may file amended returns up to three years after the original payroll taxes were due so the 2020 ERTC can be claimed until April 15, 2024. Meanwhile, the 2021 ERTC may be claimed until April 15, 2025.

Work with a Wise Consultant to Streamline Your Payroll Process

If you already know that year-end was a little rough and you might have corrections to make in Q1 of 2023, it’s not too late to line up Wise help with payroll wage and tax adjustments, completing and issuing W-2(c) forms or filing tax amendment forms. Our payroll team’s capacity will fill quickly, so if you know you want assistance, please let us know sooner rather than later.

Eager to learn more about how Wise Consulting fits into your payroll support model? At Wise, our certified, seasoned consultants are experts in payroll and tax planning. We are passionate about helping organizations succeed. Contact us today at 1-800-654-4550 or HCMHelp@WiseConsulting.com.