The ERC (Employee Retention Credit) has proven to be one of the most significant financial relief programs available to businesses impacted by the COVID-19 pandemic. By providing refundable payroll tax credits, the ERC helps companies recover funds already spent on keeping employees on payroll during difficult times. Many organizations are now successfully claiming thousands—or even millions—through the ERC, using it as a powerful tool to strengthen cash flow and reinvest in growth.
Understanding the ERC
The ERC was introduced under the CARES Act in 2020 as an incentive for employers to retain their workforce. Unlike loans that require repayment, the ERC delivers a direct refund from the IRS. Eligible employers can receive up to $26,000 per employee across eligible periods in 2020 and 2021, depending on wages and healthcare costs paid during those periods.
How the Credit Works
For 2020, the ERC offers up to $5,000 per employee for the entire year. In 2021, the credit jumps to as much as $7,000 per employee per quarter for the first three quarters. Even small businesses with only a handful of employees could see substantial refunds through the ERC.
Who Qualifies for the ERC?
Many companies mistakenly believe they don’t qualify for the ERC—especially if they received Paycheck Protection Program (PPP) loans. While the initial rules prohibited claiming both, updates to the law now allow businesses to use both programs, provided the same wages aren’t counted twice.
Two Key Eligibility Criteria
Businesses may qualify for the ERC if they experienced:
- A significant decline in gross receipts compared to the same quarter in 2019 (more than 50% for 2020 and more than 20% for 2021).
- Full or partial suspension of operations due to government orders related to COVID-19, such as reduced hours, limited capacity, or travel restrictions.
Even if a business remained open, it may still be eligible for the ERC if operational restrictions impacted revenue or productivity.
How Businesses Are Successfully Claiming the ERC
Companies across industries are filing for the ERC and receiving large refunds by carefully reviewing eligibility and calculating their claims accurately.
Steps to Claiming the ERC
- Conduct a detailed eligibility review – Many businesses qualify for the ERC without realizing it.
- Calculate qualified wages and healthcare costs – Accurate calculations are essential to maximize the ERC.
- File amended payroll tax returns – Most businesses use Form 941-X to claim the ERC for past quarters.
- Maintain proper documentation – Detailed records are vital in case of IRS review.
By following these steps, organizations have been able to secure thousands—or even millions—through the ERC.
Common Mistakes That Reduce ERC Refunds
While the ERC offers huge potential, mistakes can cause delays or reduce the refund amount. Common issues include:
- Misunderstanding which wages qualify for the ERC.
- Overlooking eligibility due to operational restrictions.
- Filing too late and missing deadlines.
Professional guidance often helps avoid these errors, ensuring that the ERC claim is accurate and maximized.
The Financial Impact of ERC Claims
The funds recovered through the ERC can have a major impact on a business’s financial stability. Companies are using ERC refunds to:
- Pay down debt.
- Invest in new equipment.
- Expand marketing efforts.
- Increase employee wages or benefits.
Because the ERC is a direct refund, it provides liquidity without adding new liabilities.
Deadlines Are Approaching
The ERC is not available indefinitely. Employers have until April 15, 2024, to claim for 2020 wages and until April 15, 2025, for 2021 wages. Businesses that delay may lose the chance to claim significant refunds through the ERC.
Why Expert Assistance Is Worth Considering
Although businesses can file for the ERC themselves, the complexity of the rules often makes expert assistance valuable. Professionals can ensure that all eligible wages are counted, documentation is complete, and the claim meets IRS requirements. For many companies, expert help has resulted in much larger ERC refunds than initially expected.
Conclusion
The ERC represents a powerful opportunity for businesses to recover substantial funds and strengthen their financial position. By understanding the program, confirming eligibility, and filing correctly, organizations can join the growing number of companies successfully claiming thousands through the ERC. With deadlines approaching, now is the time to act—don’t leave this valuable refund unclaimed.