The “Recovery Startup Business Checkbox” section is listed as question #31b under Part 3 of Form 941-X, which is needed to claim the employee retention tax credit. Instructions are below for the Recovery Startup Business Checkbox section.
Key 941-X Tax Form Takeaways:
- Eligibility for the Employee Retention Credit: The form section 31b on Form 941-X is specifically for recovery startup businesses claiming the employee retention credit for the third or fourth quarter of 2021.
- Instructions for Form 941-X: The guidelines emphasize accurately determining eligibility and the need for detailed explanation if conditions affecting the eligibility have changed since the original Form 941 filing.
- Limits on Claim Amount: For the fourth quarter of 2021, recovery startup businesses are restricted to a maximum employee retention credit of $50,000 per quarter. It’s important not to claim more than this amount in the total credits on the form.
See Important 2024 Employee Retention Tax Credit Deadline Information at the Bottom of This Article.
Form 941-X:
31b. Recovery Startup Business Checkbox
Part 3: Enter the corrections for this quarter. If any line doesn’t apply, leave it blank. (continued)
31b. Check here if you’re eligible for the employee retention credit in the third or fourth quarter of 2021 solely because your business is a recovery startup business
Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund
Part 3, “31b. Recovery Startup Business Checkbox“ from Form 941X published by the Department of the Treasury – Internal Revenue Service (IRS), OMB No. 1545-0029, revised in April 2022.
Instructions for Form 941-X:
31b. Recovery Startup Business Checkbox
CAUTION: For the fourth quarter of 2021, only a recovery startup business may claim the employee retention credit.
Whether you check the box on line 31b to tell us if you’re eligible for the employee retention credit in the third or fourth quarter of 2021 solely because your business is a recovery startup business depends on its applicability and how you originally answered the question on Form 941, line 18b.
- If you checked the box on line 18b on your originally filed Form 941 and you still qualify for the employee retention credit solely because your business is a recovery startup business, check the box on line 31b.
- If you checked the box on line 18b on your originally filed Form 941 but that response is no longer accurate, don’t check the box on line 31b. However, explain in detail on line 43 why you no longer think that you’re a recovery startup business and, if correcting the third quarter of 2021, the reasons that you still qualify for the employee retention credit.
- If you didn’t check the box on line 18b on your originally filed Form 941 and this question still doesn’t apply, don’t check the box on line 31b.
- If you didn’t check the box on line 18b on your originally filed Form 941 but you’re now claiming the employee retention credit as a recovery startup business, check the box on line 31b.
Recovery startup business. For the third quarter of 2021, a recovery startup business is an employer that:
- Began carrying on a trade or business after February 15, 2020;
- Had average annual gross receipts of $1 million or less for the 3 tax years ending with the tax year before the calendar quarter in which the employee retention credit is claimed; and
- Isn’t otherwise eligible for the employee retention credit because business operations aren’t fully or partially suspended due to a governmental order or because gross receipts (within the meaning of section 448(c) or, if you’re a tax-exempt organization, section 6033) aren’t less than 80% of the gross receipts for the same calendar quarter in calendar year 2019. The employee retention credit isn’t available in the second quarter of 2021 on the basis of being a recovery startup business.
For the fourth quarter of 2021, a recovery startup business is an employer that began carrying on a trade or business after February 15, 2020, and had average annual gross receipts of $1 million or less for the 3 tax years ending with the tax year before the calendar quarter in which the employee retention credit is claimed.
CAUTION: Recovery startup businesses are limited to a maximum employee retention credit of $50,000 per quarter. If you check the box on line 31b, don’t enter more than $50,000 per quarter in total on lines 18a and 26a.
Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund
Instructions for Part 3, “31b. Recovery Startup Business Checkbox“ came from the IRS Instructions for Form 941-X published by the Internal Revenue Service (IRS) Department of the Treasury, revised in April 2022.
Conclusion and Summary on 941-X: 31b. Recovery Startup Business Checkbox, Form Instructions
The “Recovery Startup Business Checkbox” section is just one of forty three detailed questions and calculations you must complete correctly on the 941X IRS Form. Listed as question #31b under Part 3 of the 941X, be sure to answer the Recovery Startup Business Checkbox question #31b correctly.
How To Fill Out Form 941-X For the Employee Retention Tax Credit?
Need Help Completing / Filing IRS Form 941-X?
Disaster Loan Advisors can assist your business in filing an amended Form 941 Employer’s Quarterly Federal Tax Return (for 2020 and 2021), which is IRS Form 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.
This tax form is required to be filled out correctly and filed for each qualifying quarter in 2020 and 2021 to ensure your business claims the maximum Employee Retention Credit (ERC) / Employee Retention Tax Credit (ERTC).
– Did you calculate your company’s maximum ERC Tax Credit correctly?
– Are you claiming all the ERC Credit for each qualifying quarter?
– Are you maximizing the total amount of ERC Credit your company qualifies for?
– Need a professional set of eyes to ensure you filled out your form 941X correctly?
Flexible and Professional ERC Consulting Tax Services
There are several flexible options for you. We can review, prepare, and / or file your 941-X Forms for you, or with you.
– Do-It-Yourself (DIY) and have us review your work.
– Done-With-You (DWY) and let’s collaborate together.
– Done-For-You (DFY) and we handle it all for you, from start to finish.
– Or, Consult-With-You to customize to your exact needs.
Our professional ERC fee and pricing structure is very reasonable in comparison.
We DO NOT charge a percentage (%) of your ERC Refund like some companies are charging. Some ERC firms out there are charging upwards of 25% to 35% of your ERC refund!
If you are looking for an ERC Company that believes in providing professional ERC Tax Services and value for small business owners, in exchange for a fair, reasonable, and ethical flat-fee for the amount of work required, Disaster Loan Advisors is a good fit for you.
Form 941-X and the ERC program can be very confusing as it relates to your specific business situation. Our fee structure is fair and reasonable for the same or better level of ERC service.
Schedule Your Form 941-X Consultation to have peace of mind you are making sure your company actually qualifies, AND you are calculating the employee retention tax credit properly.
Deadlines to File IRS Form 941-X in 2024 and 2025
The 2020 ERC Credit Tax Year deadline of 4/15/24 has already passed. Good news? The opportunity to retroactively claim your business Employee Retention Credit for the prior 2021 Tax Year is still available, with a next year April 15, 2025 deadline.
This really is your FINAL chance at any potential ERC tax credit refund!
How to Claim the Employee Retention Tax Credit (ERC / ERTC) and Receive Up to a $26,000 Refund Per Employee
Disaster Loan Advisors can assist your business with the complex and confusing Employee Retention Credit (ERC) and Employee Retention Tax Credit (ERTC) program.
Depending on eligibility, business owners and companies can receive up to $26,000 per employee based on the number of W2 employees you had on the payroll in 2020 and 2021.
The ERC / ERTC Program is a valuable tax credit you can claim. This is money you have already paid to the IRS in payroll taxes for your W2 employees.
Schedule Your Free Employee Retention Credit Consultation to see if your company qualifies for the employee retention tax credit.
Cover Image Credit: Irs.gov / Form 941-X / Disaster Loan Advisors.
As a leading dedicated member of the Tax and Accounting Team at Disaster Loan Advisors™, Mark focuses on unlocking the ERC Tax Credit's potential for eligible firms that qualify, providing strategic advice, and detailed guidance to ensure substantial financial recovery and growth. His methodical approach to client engagement includes comprehensive deep-dive analysis, customized consultation and guidance, and a commitment to achieving tangible results for each business served.
Disaster Loan Advisors™ (DLA) offers a comprehensive suite of services designed to navigate the complexities of the Employee Retention Tax Credit (ERC) program, ensuring that qualified businesses leverage the maximum possible benefit with minimum hassle. Unlike some firms that charge exorbitant contingency or percentage-based fees (often between 10% to 30% of your ERC refund), DLA operates on a fair and reasonable, transparent flat-fee structure that aligns with the IRS's guidelines.
If you are looking for an ERC Company that believes in providing professional ERC Services and value for small business owners, in exchange for a fair, reasonable, and ethical fee for the amount of work required, Disaster Loan Advisors™ is a good fit for you. STAY SAFE. STAY COMPLIANT. KEEP MORE OF YOUR REFUND.™