What is the Employee Retention Credit (ERC)? 2022 Complete Guide

The Employee Retention Credit (ERC) is a refundable quarterly tax credit developed in response to the COVID-19 pandemic to encourage businesses to keep employees on their payroll. It is up to $10,000 per quarter and is available to all business employees regardless of company size or type, including tax-exempt organizations. Qualified wages paid to eligible employer are up to $10,000 per quarter. The PPP (Payroll Protection Program) provides small businesses with eight weeks of payroll assistance, while the ERC is a tax credit payable via check from the IRS and doesn't need to be repaid. The IRS allows employees to claim both ERC and PPP if the PPP loan is separate from the employer’s qualifying wages.

To calculate the Employee Retention Credit, employers must determine when their business was affected and report their qualified wages on their quarterly employment tax returns using an amended Form 941X. Employers can apply for a retroactive ERC refund by filing one of two 941-X forms: Adjusted Employer’s Quarterly Federal Tax Return Form or Claim for Refund Form. The ERTC program has already expired, but eligible employers can still take advantage of it against qualified wages and applicable employment taxes. Job openings remain elevated at a record-breaking 11.3 million unfilled positions as of May 2022, but the unemployment rate has barely changed. Businesses have yet to adapt to the new reality the pandemic has brought to the business world, with people accustomed to working from home, working whenever they want and wherever they want. Employers have to sell themselves rather than the other way around.