Qualified salaries include expenses from the eligible employer's qualifying health plan that can be appropriately allocated to salaries. The ERTC is a refundable credit that companies can apply for on qualified salaries, including certain health insurance costs, paid to employees. The IRS has also clarified that tips can be considered qualified wages for ERTC purposes, as long as they are Medicare salaries. The early termination of the ERTC means that companies must return withheld payroll taxes to monetize their early credit, advised Marvin A.
Basically, if they are considered to be majority owners, their salaries are not salaries that qualify for 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. In addition, since the beginning of the ERTC program, several laws have come into effect that affect the way in which credit can be applied for.
A company may be eligible for ERTC under this provision, even if its revenues increased during the corresponding quarter. Eligible companies, Smith said, can file a retroactive ERTC refund request on qualified wages previously paid during the past calendar quarters by filing Form 941-X, the employer's adjusted quarterly federal tax return, or the request for reimbursement. The ERTC is available for companies of all sizes: there is no limit to the number of employees, although it is easier for small businesses to take advantage of it. If you haven't yet applied for PPP loan forgiveness, consider applying for non-payroll expenses to maximize the salary you can use to apply for your ERTC.
In addition, most of the notice reiterates the ERTC FAQs that were previously posted on the IRS website. Business tax filers will need additional payroll data and other documents to file their quarterly returns with the ERTC. The deadline for eligible businesses to apply for the ERTC is with their quarterly Form 941 tax returns, which are due on July 31 and Oct. 1.Although the Employee Retention Tax Credit (ERTC) program has officially expired, this does not affect a company's ability to apply for the ERTC retroactively.
Consequently, if previously salaries were wrongly classified as qualified wages for the ERTC, then amendments to 941 would be necessary to correct any unintentional errors.