How to Get Refunded for Employee Retention Credits

The Employee Retention Credit (ERC) was a refundable tax credit approved under the CARES Act to help small business owners keep their employees on the payroll during the COVID-19 pandemic. The credit was applied to the employer's share of the employee's Social Security taxes and was fully refundable. Business owners who weren't recovering startups weren't eligible for the employee retention credit for wages paid after September 31. The purpose of the ERC was to encourage employers to keep employees on the payroll even if they weren't working during the period covered due to the effects of the coronavirus outbreak. This means that the credit would serve as an overpayment and would be refunded to you after subtracting your share of those taxes.

The employee retention credit under the CARES Act encourages companies to keep employees on their payroll. The IRS published a series of frequently asked questions about the employee retention credit available as part of the recently published CARES Act. Despite the bad news about the repayment deadline, employers who qualify for the ERC should continue to consider filing a modified payroll tax return to apply for the benefit. The employee retention credit applies to workers employed full or part time if their employers met the requirements. When employers file their annual tax return, they will receive a refund of their ERC credits.

While the IRS has made progress in recent years in terms of online tracking and access to information for taxpayers, those systems do not provide any information on the processing time of ERC refund requests in amended payroll tax returns. The employee retention credit was a refundable tax credit intended to allow small business owners to continue paying their employees during the COVID-19 pandemic. This means that the credit served as an overpayment and would be refunded to you after subtracting your share of those taxes. If you have any questions about the ERC and whether your company meets the requirements, contact your CPA or tax advisor. The Employee Retention Credit is an important tool for businesses affected by COVID-19, and understanding how it works can help you get your refund faster.