While, when the CARES Act was created, employers could not simultaneously obtain a Paycheck Protection Program (PPP) loan and apply for the ERTC, all eligible employers can now obtain a PPP loan and apply for the ERTC. If you took out the Paycheck Protection Program (PPP) loan, you can still receive payment for ERTC-qualified salaries. The ERTC serves as a lifesaver to help businesses and eligible employers and their employees survive the waves of unexpected events that have gripped them in recent years. The ERTC is treated as a refund in the form of business loans, so it's as if it were money that the government owes you, as if you were rewarded for surviving these past few years as a company.
It is important to note that companies cannot claim a payroll expense as an ERTC salary and as a forgivable payroll cost in the PPP waiver request. The government introduced the employee retention tax credit (ERTC), also known as the employee retention credit (ERC), to help employers retain staff and weather the economic storm. Despite the benefits to their company, the National Federation of Independent Business (NFIB) found that only 4% of small business owners are familiar with the ERTC program. The salary requirements for the ERTC also vary depending on the size of the organization and the number of full-time employees who work 30 hours a week or 130 hours a month.
The ARPA, for example, allows small employers who received a Paycheck Protection Program (PPP) loan to also apply for the ERTC. Employers who received a PPP loan and wish to apply for the ERTC retroactively for the past few quarters can now file Form 941-X, the employer's adjusted quarterly federal tax return, or the request for reimbursement for the applicable quarters in which qualified wages were paid. Employers can apply for the ERTC when filing their quarterly taxes using the employer's quarterly federal tax return Form 941 for the applicable periods. 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.
To receive the ERTC, companies must monetize the credit for each payroll period by filing a quarterly payroll tax return using Form 941. Business tax filers will need additional payroll data and other documents to file their quarterly returns with the ERTC. Wages and compensation subject to FICA taxes and qualified health expenses will generally qualify for the ERTC.