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FAQ

Our Frequently Asked Questions can help answer many of your questions

What is the Employee Retention Tax Credit?

The Employee Retention Tax Credit is a fully refundable tax credit for employers equal to 50 percent of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees for all 2020 and 70 percent of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees each quarter in 2021 .This Employee Retention Credit applies to qualified wages paid after March 12, 2020, and before December 31, 2021.The maximum amount of qualified wages taken into account with respect to each employee for all calendar quarters in 2020 is $10,000, so that the maximum credit for an Eligible Employer for qualified wages paid to any employee is $5,000 and for each calendar quarter in 2021 is $10,000, so that the maximum credit for an Eligible Employer for qualifies wages paid to any employee is $7,000. The total eligible per employee for all periods is $33,000.

Will the IRS really pay me if the amount of my Employer Retention Tax Credit is more than the payroll taxes I owe?

Yes, the IRS will pay you in the form of a check for any amount of the Employee Retention Credit that exceeds the total amount of the businesses tax liability after deposits are made for the quarter. For employers that have paid all EFTPS payroll tax deposits as scheduled the Employee Retention Tax Credit will be paid in full to the employer.

May an Eligible Employer that receives a Paycheck Protection Program (PPP) loan receive the Employee Retention Tax Credit?

Yes, but not for the same wages. The amount of qualified wages for which an eligible employer may claim the ERTC does not include the amount used for forgiveness of the Paycheck Protection Program (PPP). You may however use funds received from the Paycheck Protection Program (PPP) as long as those funds are not included in the amount used for forgiveness. (The IRS has not updated their FAQ section for this subject. For reference from the IRS on rules related to obtaining both the PPP and ERTC see IRS Notice 2021-20)

Is the ERTC Taxable (subject to income tax)?

Although the ERTC is not in itself taxable as it is considered a tax credit, the net effect of receiving the ERTC increases your income taxes as you are not allowed to take as an expense any payroll expenses paid for by the ERTC. For further clarification speak with your CPA or income tax professional.

Who is an eligible employer?

Eligible Employers for the purposes of the Employee Retention Credit are employers that carry on a trade or business during calendar year 2020, including tax-exempt organizations, that either:

  • Fully or partially suspend operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or
  • Experience a significant decline in gross receipts during the calendar quarter.
When is the operation of a trade or business partially suspended for the purposes of the Employee Retention Credit?

The operation of a trade or business is partially suspended if an appropriate governmental authority imposes restrictions on the employer’s operations by limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19 such that the employer can still continue some, but not all of its typical operations.

Examples of such orders include:

  • Limitation of an employer’s customer/store capacity
  • An employer’s suppliers are unable to make deliveries of critical goods or materials due to a governmental order that causes the supplier to suspend its operations
  • An employer is required to move to an “online format” or “telework” that results in the operations of the business not continuing in a comparable manner as if the business were open regularly
  • An employer's workplace is closed by a governmental order for certain purposes, but the employer's workplace may remain open for other purposes or the employer is able to continue certain operations remotely
  • An employer that reduces its operating hours
  • Employers that operate a trade or business in multiple locations and are subject to State and local governmental orders limiting operations in some, but not all, jurisdictions

If the order was effective for a portion of the calendar quarter, then the employer is an Eligible Employer for the entire calendar quarter.

What is a "significant decline in gross receipts"?

A significant decline in gross receipts begins with the first calendar quarter in 2020 in which an employer’s gross receipts are less than 50 percent of its gross receipts for the same calendar quarter in 2019. The significant decline in gross receipts ends with the first calendar quarter that follows the first calendar quarter in which the employer’s 2020 quarterly gross receipts are greater than 80 percent of its gross receipts for the same calendar quarter in 2019, or with the first calendar quarter of 2021. For Jan. 1, 2021, through June 30, 2021, for the 2021 ERTC, a significant decline in gross receipts means the period beginning with the first calendar quarter in 2021 where gross receipts are less than 80% of gross receipts for the same calendar quarter of 2019, and ending with the calendar quarter following the first calendar quarter where quarterly gross receipts are greater than 80% of gross receipts for the same calendar quarter in 2019.

Qualified wages are wages (as defined in section 3121(a) of the Internal Revenue Code (the “Code”)) and compensation (as defined in section 3231(e) of the Code) paid by an Eligible Employer to some or all employees after March 12, 2020, and before January 1, 2021 for the 2020 credit or after January 1, 2021 and before July 1, 2021 for the 2021 credits. Qualified wages include the Eligible Employer’s qualified health plan expenses that are properly allocable to the wages. The definition of qualified wages depends, in part, on the average number of full-time employees (as defined in section 4980H of the Code) employed by the Eligible Employer during 2019. Qualified health plan expenses are amounts paid or incurred by an Eligible Employer that are properly allocable to employees’ qualified wages to provide and maintain a group health plan, but only to the extent that these amounts are excluded from the employees’ gross income.
Employers will report their total qualified wages and the related credits for each calendar quarter on their federal employment tax returns, usually quarterly on Form 941 (though Code § 6302 generally requires deposits of employment taxes to be made on a monthly or biweekly basis). Form 941 is used to report income and Social Security and Medicare taxes withheld by the employer from employee wages, as well as the employer’s portion of Social Security and Medicare tax. In anticipation of receiving the 2020 ERTC, employers can fund the 2020 ERTC in advance with federal employment taxes, including taxes withheld from employees’ wages that are required to be deposited with the IRS or by requesting an advance of the credit from the IRS on Form 7200. The Consolidated Appropriations Act added a provision to allow Small Employers (but not Large Employers) the ability to elect an advance payment of the 2021 ERTC in an amount not to exceed 70% of the average quarterly wages paid by the employer in calendar year 2019. If such Small Employer is a seasonal business, it can elect to use 70% of the average quarterly wages that correspond to the calendar quarter to which the election relates. The Secretary is directed to provide rules on the procedures for this Small Employer election for the 2021 ERTC.
How long will it take to get my refund?

For any paper filed (excludes e-filed) 941 or 941-X the IRS is currently estimating a refund time of 8-12 months (subject to processing times for the IRS. ERTCFiling.com highly recommends employers file form 7200 Advance Payment of Employer Credits Due to COVID—19. The expected wait time for form 7200 Advance Payment of Employer Credits Due to COVID – 19 is 1-3 months (subject to processing times by the IRS). Unfortunately, form 7200 is not available after the period for which your form 941 Employer Quarterly Federal Tax Return is due.

When I create my form on ERTCfiling.com am I done?

No. If you are creating form 7200 Advance Payment of Employer Credits Due to COVID-19 you will need to follow the instructions included with your download, including faxing to the IRS at 855-248-0552. For form 7200 you will also have access to form 941 or form 941-X after the period for which you’re claiming the ERTC closes. You will need to report that you have previously filed from 7200 as well as the accurate filing of eligible wages and applicable credits for the ERTC. If you are creating form 941 or 941-X these forms need to be printed, signed, or mailed to the address listed on your instructions.

Why do I have to re-enter the same information in different periods in ERTCFiling.com?

Because of the calculation changes every period has a different set of rules that applies to them. Most importantly, due to the interaction of the Paycheck Protection Program (PPP loan) there are important calculations that will prevent the user from claiming the ERTC for funds that are use for forgiveness for the PPP.

How long will it take to get my refund?

For any paper filed (excludes e-filed) 941 or 941-X the IRS is currently estimating a refund time of 8-12 months (subject to processing times for the IRS. ERTCFiling.com highly recommends employers file form 7200 Advance Payment of Employer Credits Due to COVID—19. The expected wait time for form 7200 Advance Payment of Employer Credits Due to COVID – 19 is 1-3 months (subject to processing times by the IRS). Unfortunately, form 7200 is not available after the period for which your form 941 Employer Quarterly Federal Tax Return is due.

When I create my form on ERTCfiling.com am I done?

No. If you are creating form 7200 Advance Payment of Employer Credits Due to COVID-19 you will need to follow the instructions included with your download, including faxing to the IRS at 855-248-0552. For form 7200 you will also have access to form 941 or form 941-X after the period for which you’re claiming the ERTC closes. You will need to report that you have previously filed from 7200 as well as the accurate filing of eligible wages and applicable credits for the ERTC. If you are creating form 941 or 941-X these forms need to be printed, signed, or mailed to the address listed on your instructions.

Why do I have to re-enter the same information in different periods in ERTCFiling.com?

Because of the calculation changes every period has a different set of rules that applies to them. Most importantly, due to the interaction of the Paycheck Protection Program (PPP loan) there are important calculations that will prevent the user from claiming the ERTC for funds that are use for forgiveness for the PPP.

When will the 941 be available?

Form 941 will be available on (or around) April 1, 2021. For those that file from 7200 Advance Payment of Employer Credit Due to COVID-19, your corresponding form 941 will be required to be filed.

When will the 941-X and 941 (as amended) be available

Form 941-X will be available on (or around) April 1, 2021.

How long will it take to get my refund?

For any paper filed (excludes e-filed) 941 or 941-X the IRS is currently estimating a refund time of 8-12 months (subject to processing times for the IRS. ERTCFiling.com highly recommends employers file form 7200 Advance Payment of Employer Credits Due to COVID—19. The expected wait time for form 7200 Advance Payment of Employer Credits Due to COVID – 19 is 1-3 months (subject to processing times by the IRS). Unfortunately, form 7200 is not available after the period for which your form 941 Employer Quarterly Federal Tax Return is due.

When I create my form on ERTCfiling.com am I done?

No. If you are creating form 7200 Advance Payment of Employer Credits Due to COVID-19 you will need to follow the instructions included with your download, including faxing to the IRS at 855-248-0552. For form 7200 you will also have access to form 941 or form 941-X after the period for which you’re claiming the ERTC closes. You will need to report that you have previously filed from 7200 as well as the accurate filing of eligible wages and applicable credits for the ERTC. If you are creating form 941 or 941-X these forms need to be printed, signed, or mailed to the address listed on your instructions.

Why do I have to re-enter the same information in different periods in ERTCFiling.com?

Because of the calculation changes every period has a different set of rules that applies to them. Most importantly, due to the interaction of the Paycheck Protection Program (PPP loan) there are important calculations that will prevent the user from claiming the ERTC for funds that are use for forgiveness for the PPP.

When will the 941 be available?

Form 941 will be available on (or around) July 1, 2021. For those that file from 7200 Advance Payment of Employer Credit Due to COVID-19, your corresponding form 941 will be required to be filed.

When will the 941-X and 941 (as amended) be available

Form 941-X will be available on (or around) July 1, 2021.