ERC Tax Credit Guide

Published August 19, 2023

Are you looking for information on the Employee Retention Credit (ERC) tax credit? You’ve come to the right place!

This guide will help you learn about when ERC started, who qualifies, how much money you can get, how to claim it, and what the deadline is.

Get ready to learn everything you need to know about ERC tax credits.

When Did ERC Start?

The ERC program started in March 2020 when Congress passed the Families First Coronavirus Response Act alongside the CARES Act. The goal was to sustain the U.S economy during the pandemic, so businesses could keep their employees on payroll even if they weren’t working.

Initially, not many businesses qualified due to difficulty meeting revenue decline requirements, but more expansions of ERC allowed for more companies to benefit from it. The Internal Revenue Service (IRS) cleared up any confusion by providing clarifying guidance on frequently asked questions. This helped businesses and their tax partners accurately claim benefits with confidence.

With its passage, a $1.9 trillion relief bill became available for businesses to get funded for lost revenue during COVID-19. As a result, 70% of businesses were expected to take advantage of this opportunity as predicted by the IRS initially.

Who Qualifies?

Businesses that have experienced a significant decline in gross receipts during 2020 or within the first three quarters of 2021, as well as new startup businesses that began operations after February 15, 2020, may qualify for stimulus refunds. There are two main ways to be eligible:

  • Employers must match the required decline in revenue within any quarter of 2020 or 2021.
  • Employers must have W-2 employees.

The ERC can provide up to $5,000 per employee from March 13, 2020, to Dec. 31, 2020, and up to $21,000 per employee from Jan. 1, 2021, to September 30th, 2021. Depending on your company size, you could receive anywhere between six figures and seven figures back in funds!

To determine eligibility, you’ll need to elect using the immediately preceding calendar quarter. Don’t miss out on this great opportunity for your business!

How Much Money Can You Get?

You could get up to $5,000 per employee from March 13th, 2020 to Dec. 31st, 2020 and up to $21,000 per employee from Jan. 1st, 2021 to Sept. 30th, 2021 with the Employee Retention Tax Credit (ERC).

Depending on your business’ qualified wages paid and the number of employees you had in 2019, 2020, and 2021, the amount you receive can vary.

To be eligible for this tax credit in 2020, a business must have experienced a full or partial suspension of operations due to government orders related to COVID-19 between March 12th – December 31st.

For 2021 eligibility requirements include a 20% year-over-year decline in gross receipts during any calendar quarter compared to the same quarter in 2019.

The credit is equal to 50% of qualified wages paid each quarter up to $10,000 per employee capped at $5,000 total for 2020 and 70% of qualified wages paid each quarter up to $10,000 per employee capped at $7,000 total for 2021.

Also note that the forgiveness of PPP loans may also impact your credit amount so it’s important to keep track of both programs separately when calculating how much money your business will receive.

How to Claim

To claim the Employee Retention Credit, you’ll need to file IRS Form 941-X to amend your filed returns (Form 941) for 2020 and 2021. Before you do so, make sure that your Form 941 has been received and processed by the IRS. In addition, have all relevant data available such as payroll journal data, personal information including Employer Identification Number, prior years’ tax returns, and copies of Form 941 for every quarter you plan to claim the credit.

When filing Form 941-X, enter in all pertinent information about your business such as contact details and any other documentation required by the form. You will also need to provide detailed information about payroll expenses during each qualifying quarter—including wages paid to each employee—to be able to correctly calculate the amount of credit due. To ensure accuracy when filling out this form, consult with a professional like ERC Reveal who understand the program.

Once you have completed and submitted Form 941-X along with all required documents and information, wait for confirmation from the IRS that they have accepted your return before claiming any credits. If approved, you should receive a notification letter from them within 90 days stating how much money you are eligible to receive in ERC credits.


You have until the end of the period of limitations (3 years from when Form 941 was filed) to file Form 941-X and claim your Employee Retention Credit.

To be specific, Forms 941 are considered filed on April 15 of the succeeding year if they are submitted before that date. That means you have three years from your filing date to make any corrections or amendments by submitting an amended return with a Form 941-X.

The ERC program is beneficial for employers who experienced a downturn in business due to COVID-19, as it allows them to receive up to $5,000 per employee as a tax credit for eligible wages paid between March 12, 2020 and January 1, 2021. This tax credit offers significant savings for employers – but only if they take action before the period of limitations closes.

It’s important not to miss out on claiming this credit since it can have major implications for businesses facing financial challenges due to reduced operations or revenue losses during 2020. Don’t wait too long: take advantage of this opportunity now and get back some of what you’ve lost.

CDN Newswire