Form 941 X: How Your Business Can Get the Most out of an ERTC Amendment
The Employee Retention Tax Credit is available to most businesses who were affected by the Covid pandemic in the form of partial shutdowns, lost revenues, manufacturing and/or material losses as well as other mitigating factors. Initially enacted by congress in March of 2020, the fully refundable payroll tax credit provides a route for employers who may have failed to file or require necessary revisions to reconcile their tax obligations over the past three years.
According to the CARES Act, those companies who met the required conditions and don’t have outstanding tax obligations in areas such as outstanding PPP or EIDL loans, are entitled to receive up to $33,000 in refundable payroll tax credits. With an estimated 4.4 million businesses owners affected in the year 2020 alone, that equates to billions of dollars in non-filed returns at a 70% credit rate for the ERTC.
By focusing on the benefits of filing an amended business tax return, we’re going to provide you with tips on how to ensure you claim your payroll tax credit for prior years as well as receive the ERTC 2022.
File Your Form 941 X
Form 941 X also known as the Adjusted Employer’s Quarterly Federal Tax Return, is used whenever a business owner needs to make amendments to any previously filed tax return. Often occurring as a result of omissions,errors, or miscalculations, these slight differences in reported information can cost your business tens of thousands of dollars in expected revenues.
IRS guidelines state that an individual or business owner may retroactively file or amend in many cases, a tax return in order to claim credits, reduce tax liabilities or receive refunds amounts owed. In the event that the three year deadline passes, then the rights to any possible refunds are forfeited.
Our professional tax experts at ERTCFiling.com have helped hundreds of business owners like you recover eligible portions of the Employee Retention Credit not previously claimed by utilizing the ability to file an amended tax return.
Take Advantage of Non-Refundable Portions of ERTC
Although, the majority of the ERTC is fully refundable, in regards to the employer’s share of certain payroll taxes and employee wages, a portion of the credit is not deemed as non-refundable.
- Social Security Wages– Employers across the country are required to pay a total of 15.3% in self-employment taxes. However, they are also legally taxed for the social security portion of each employee’s wages. This amounts to a 6.2% tax for every employee within your company.
- Family Medical Leave Pay – Family Medical Leave is a benefit provided to all full -time employees who have met the federally mandated amount of hours and length of employment. Businesses are tasked with paying up to 60% of regular wages for workers who choose to exercise this option.
- Employee Sick Days- Sick or vacation days are provided at a typical rate of 3 hours per 40 hour pay period worked. On average, an employer pays out an estimated $432 per year in sick leave for their employees.
- Medicare Taxes- A portion of the 6.4% in total employee payroll taxes goes to fund Medicare in preparation for retirement years. The amount that you deposit as a business owner is matched by your employee’s via paycheck deductions.
- Employer Portion of Healthcare Expenses- Health insurance premiums are one of the most expensive parts of an employee compensation package. These fees have seen an increase of as much as 43% in recent years.
On a normal business tax return that excludes the Employee Retention Credit, these expenses would not apply as a benefit. However, with the revision of IRS Form 941 (941X-amended returns),for Q1 of 2022, those who paid all required employer taxes above can receive a portion of those funds back in the form of payroll credits.
Assess Eligibility for Prior Quarters
The Safe Harbor Program was created by the Internal Revenue Service to assist those business owners who may have inadvertently claimed credits for which they were no longer entitled to bases upon continuous tax law updates, retroactive repealing of credits or misunderstanding of qualifying wages.
The past three tax seasons have been wrought with changes, revisions, and trillions of dollars in tax credit refunds. If you aren’t sure of whether your business stands to collect tens of thousands in refundable credits, speak with one of our highly trained tax specialists today.