Frequently asked question #94 “May an Eligible Employer change an election to forego the Employee Retention Credit?” under the Other Issues section of FAQs: Employee Retention Credit under the CARES Act, provided by the IRS.gov to help business owners understand the ERC program. Information is below for the question #94 May an Eligible Employer change an election to forego the Employee Retention Credit?
ERC Credit Frequently Asked Question #94:
COVID-19-Related Employee Retention Credits:
Special Issues for Employers FAQs
94. May an Eligible Employer change an election to forego the Employee Retention Credit?
Yes. If an Eligible Employer elected not to claim the Employee Retention Credit in one calendar quarter, the Eligible Employer is not prohibited from claiming the credit in a subsequent calendar quarter for qualified wages paid in that subsequent quarter provided it meets the requirements to claim the credit.
In addition, an Eligible Employer can file a claim for refund and make an interest-free adjustment for a prior quarter to claim the Employee Retention Credit to which it was entitled in a prior quarter, following the rules and procedures for making such claims or adjustments.
See the instructions to Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. However, qualified wages paid during the first quarter of 2020 should be reported on the employer’s second quarter Form 941, Employer’s Quarterly Tax Return.
Therefore, an employer should not file a Form 941-X to make an adjustment for qualified wages paid during the first quarter of 2020. See How does an Eligible Employer report qualified wages paid in the first quarter of 2020?
Example: Employer H paid qualified wages during the second quarter of 2020 but did not claim an Employee Retention Credit on its second quarter 2020 Form 941, Employer’s Quarterly Tax Return.
If Employer H subsequently decides to claim the credit for the second quarter of 2020, Employer H should file a Form 941-X within the appropriate timeframe to make an adjustment. Employer H should not use its third quarter 2020 Form 941 to claim an Employee Retention Credit for qualified wages paid in the second quarter of 2020.
Conclusion and Summary on ERC Credit FAQ #94. May an Eligible Employer change an election to forego the Employee Retention Credit?
The “May an Eligible Employer change an election to forego the Employee Retention Credit?” is Frequently Asked Question #94 of many commonly asked questions small business owners are wondering about how to file the Employee Retention Tax Credit (ERTC). The IRS ERC Tax Credit program is a confusing and complex process to determine the correct ERC calculations your business qualifies for. Answers to “May an Eligible Employer change an election to forego the Employee Retention Credit?” and filling out form 941-X may change slightly from frequently updated rules and regulations from the IRS. Leave a comment below if you have further questions on ERC Credit FAQ #94.
Help Completing / Filing / Claiming the Employee Retention Credit (ERC)
Receive Up to a $26,000 ERC Credit from the IRS Per Employee
Disaster Loan Advisors can assist your business with the complex and confusing Employee Retention Credit (ERC), Form 941-X, and the 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 Tax Credit Program is a valuable IRS tax credit you can claim. This is money you have already paid to the IRS in payroll taxes for your W2 employees.
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Schedule Your Free Employee Retention Credit Consultation to see what amount of employee retention tax credit your company qualifies for.
Cover Image Credit: Irs.gov / ERC FAQ / Disaster Loan Advisors.