COVID-era tax credit still available to business owners until 2023

Most of the assistance programs started during the COVID pandemic to help business owners have ended. However, one of the few leftover initiatives still accessible to entrepreneurs is the Employee Retention Tax Credit (ERTC). Glenn Kruse is the Area Director of UGA’s Small Business Development Center’s Gwinnett Office, and has over 30 years of experience managing large and small businesses. To discuss the tax credit, Mark Collier, host of the Playbook and area director for the UGA’s SBDC, sits down with Kruse to discuss the tax program and why business leaders should take advantage of it while they still can.

The tax credit was implemented under the Trump administration’s CARES act, to reward employers who retained their employees throughout the pandemic. Available to businesses which took out a Paycheck Protection Program (PPP) loan, the credit was intended to help companies avoid layoffs and keep their doors open. Kruse notes that many eligible business owners may be unaware they still qualify, as they can be applied retroactively.

The ERTC can offer employers thousands of dollars per employee against federal employment taxes. To claim the credit, business owners must file an IRS form 941-X. This application will adjust the company’s federal tax return for the first quarter of 2020, when the economy was shutdown to stop the spread of COVID. Filers will need their PPP loan information and paycheck records at the ready.

The credit will equal 50% of each employees wages during the specified period, up to $10,000. However, contractors and 1099 employees are not included in the tax credit’s calculations, and the ERTC cannot be used in conjunction with other incentives from the CARES act, such as a Work Opportunity Tax Credit. Kruse notes that the opportunity window to take advantage of the program ends in March of 2023, leaving only a few months to send the form.

The ERTC is one of the last remaining COVID benefits businesses can claim. Companies which supported their workforce during the pandemic should be sure to take advantage of the tax credit before it ends next year. As always, Kruse encourages business owners to speak with a tax advisor before applying.