What’s New – Employee Retention Credit – 2020 Vs 2021 Comparison Chart

The federal government established the Employee Retention Credit (ERC) to provide a refundable employment tax credit to help businesses with the cost of keeping staff employed.

Eligible businesses that experienced a decline in gross receipts or were closed due to government order and didn’t claim the credit when they filed their original return can take advantage by filing adjusted employment tax returns. For example, businesses that file quarterly employment tax returns can file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund PDF, to claim the credit for prior 2020 and 2021 quarters.

With the exception of a recovery startup business, most taxpayers became ineligible to claim the ERC for wages paid after September 30, 2021. A recovery startup business can still claim the ERC for wages paid after June 30, 2021, and before January 1, 2022. Eligible employers may still claim the ERC for prior quarters by filing an applicable adjusted employment tax return within the deadline set forth in the corresponding form instructions. For example, if an employer files a Form 941, the employer still has time to file an adjusted return within the time set forth under the “Is There a Deadline for Filing Form 941-X?” section in Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.