How to Apply for the Employee Retention Credit in 2023

The Employee Retention Credit (ERC) is a tax credit that was designed to help businesses keep employees on their payroll during the COVID-19 pandemic. Although first introduced in 2020 as part of the CARES Act, the credit has since been extended and expanded. In 2023, businesses can still take advantage of the ERC. Start a search today to find how to apply for the Employee Retention Credit.

Step 1: Determine Eligibility

The first step in applying for the ERC is to determine whether your business is eligible. In 2023, eligible businesses include:

If you have lingering questions about your eligibility, speak with a financial representative or tax authority. They can clarify any questions and verify whether your business meets the necessary criteria for claiming the credit.

Step 2: Calculate Your Credit Amount

Once you have determined that your business is eligible, the next step is to calculate the amount of the credit.

The maximum Employee Retention Credit (ERC) amount in the United States depends on the time period for which the credit is being claimed, but absolutely maxes out at $26,000 per employee.

For wages paid between March 13, 2020, and December 31, 2020, the maximum ERC amount is $5,000 per eligible employee.

For wages paid between January 1, 2021, and June 30, 2021, the maximum ERC amount is increased to $7,000 per eligible employee per quarter, for a total maximum credit of $14,000 per employee.

For wages paid between July 1, 2021, and December 31, 2021, the maximum ERC amount is increased to $7,000 per eligible employee per quarter, but the maximum credit per employee is now limited to $28,000 for the second half of the year.

Step 3: Apply For Employee Retention Credit Online

Once complete, you can fill out the Employee Retention Credit 2023 Application by filing Form 941. The credit is claimed on Line 11c of the form. You should also keep a copy of your Form 941 and any supporting documents.

To support your retention credit claim, it is important to have kept and continue to keep detailed records and documentation. This includes records of the decline in gross receipts or suspension due to government orders, as well as records of qualified wages paid to each employee.

Step 4: Seek Professional Help if Needed

Applying for the ERC can be complex, and you may want to seek professional help from a tax professional or accountant. They can help you determine eligibility, calculate the credit amount, and file the necessary forms and documentation.

A financial advisor stays well-versed in tax laws and regulations, so they can also guide you through the specifics of the ERC on your employment tax return. Additionally, they can assist you in staying compliant with any further changes to the ERC program.

Put the ERC To Work For Your Company

While businesses can still take advantage of the Employee Retention Credit Program in 2023, the process has been modified. By following these steps and seeking professional guidance, businesses can ensure that they are claiming the credit correctly and receiving the maximum benefit.

The ERC has provided significant financial relief to businesses, helping them retain employees, maintain operations, and navigate economic challenges. If your company qualifies for this tax credit, it isn’t too late to reap the benefits!