The Employee Retention refundable tax credit can seriously help businesses who struggled financially due to the COVID-19 pandemic. The end of the pandemic did not signal the end to inflation. Even when social distancing regulations subsided and large gatherings returned to normal, businesses were still struggling to recoup losses.
Protecting Your Business from Inflation Rates
Continuing inflation has continued to hurt small businesses as they try to recover. In 2020, the U.S. inflation rate was 1.23%. In 2022, the U.S. inflation rate was up to a staggering 8% with a 3.3% increase from 2021. With the ERC tax credit, eligible businesses can amend their tax returns for the 2020 and 2021 tax years. Through this refundable credit, they could even earn more than the amount they owed in taxes.
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How Does the Average ERC Refund Work?
Not every eligible business earns more from the ERC tax credit than they owe in taxes. Each business that applies needs to calculate the ERC tax credit based on qualified wages from employees. The amount that an eligible business could earn from ERC is reliant on how many W-2 employees they had paid wages to during the pandemic.
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Some businesses will earn less from the ERC tax credit than they owe in taxes for 2020 or 2021. In these cases, the amount received will go towards those taxes. If the amount you receive is greater than the amount owed in taxes, the rest of the tax credit comes to your business as a refund. This refund can be used any way you choose without restriction. For example, you can spend it on paying employee wages and benefits, bills, or other business expenses.
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What Is the Average ERC Refund?
Five Star ERC Experts has helped eligible businesses apply for their ERC tax credit refunds valued at varying amounts. The aggregate average across thousands of businesses submitted is over $100K. We have seen several businesses get approved for over $1 million in total credits. Even small businesses have received tens of thousands in refundable tax credit through the ERC program as part of the CARES Act.
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Regardless of how much your business can earn from the ERC tax credit, you should apply if eligible. Even receiving a total credit of $10,000 is $10,000 more than your business had before they applied. Our specialists will always make sure that you are fully eligible before applying.
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How Much Will My Business Earn from ERC?
The best way to check how much your business will earn is by calculating your ERC tax credit. You can also consult with your ERC specialist when they help you apply for the refundable tax credit. They can answer any questions you have regarding your tax credit. ERC specialists are certified tax professionals who specialize in submitting ERC applications to the IRS. Through them, you can get answers to questions pertaining to your business. For example, they can help you understand how to amend your 2020 or 2021 tax credit in order to determine whether the ERC tax credit will provide you with an amount greater than what you owe.
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When to Expect a Refund in 2024
The deadline for the 2020 tax year is fast approaching on April 15, 2024. The 2021 deadline is April 15, 2025. However, due to a recent IRS moratorium, you can expect longer delays in receiving your tax credit, even longer than 9 months. For this reason, make sure you submit your application to the IRS as soon as possible.
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False claims to the IRS have led to increased scrutiny on applications submitted. Never risk an audit from the IRS. Through Five Star ERC Experts’ team of certified tax professionals, you receive audit protection to ensure that you are in great hands. We aim to reduce the stress of business applying for this financial relief by putting them in the hands of tax professionals with experience handling ERC applications. Following a compliant fee service model is an additional assurance you receive through our ERC services.