The ERTC is a refundable credit that companies can apply for on qualified salaries, including certain health insurance costs, paid to employees. The early termination of ERTC means that companies must pay withheld payroll taxes to monetize their anticipated credit, advised Marvin A. Kirsner, a shareholder in Fort Lauderdale, Florida. To be eligible for the ERTC, your salary must be subject to FICA taxes.
This includes employee and employer contributions to Social Security and Medicare. However, health insurance premiums and other medical costs that aren't covered by insurance plans may qualify. Find out if you qualify with the help of Benchmark Human Capital. Before the Infrastructure Act, a special rule applied to recovery startups that allowed them to apply for the ERC even if they did not suffer the required total or partial suspension of operations or a decrease in gross revenues.
Business tax filers will need additional payroll data and other documents to file their quarterly returns with the ERTC. Consequently, it is important to ensure that all eligible expenses, including non-payroll costs, such as utility, rent and operating expenses, to name a few, are included in PPP loan forgiveness applications to maximize the qualified salaries available to ERTC. The ARPA, for example, allows small employers who received a Paycheck Protection Program (PPP) loan to also apply for the ERTC. Eligible employers can apply for the ERTC by calculating the ERTC amount for a pay period and reducing the required payroll deposit by that amount.
In any calendar quarter in which the ERTC amount exceeds the OASDI taxes imposed on the employer, the franchise is considered a refundable overpayment. The ERTC is a payroll tax credit (not an income tax credit) and will ultimately be reported on Form 941.