2024 Employee Retention Credit Filing Deadlines Are Fast Approaching

The Employee Retention Credit (ERC) was launched by the federal government to provide financial relief to small businesses that kept employees on the payroll throughout the pandemic. The credit is available for the 2020 and 2021 tax years, and eligible businesses may retroactively apply using IRS Form 941-X.

Key takeaways

• The deadline for all 2020 filings is April 15, 2024. On average, 2020 quarters make up a total of 20% of the eligible credit dollars available to small businesses and 30% of the ERC credit amount small businesses qualify for.

• Applying and filing for the ERC takes time. If you are applying for ERC and you want to beat the deadline we recommend you apply by February 15, 2024, to allow ample processing time. (While we can often get your credit processed much quicker than this, some accounts require extra due diligence and back and forth).

• To reserve your spot in line with the IRS your business must have all revised payroll tax forms for 2020 quarters postmarked and in the mail to the IRS prior to April 15, 2024.

• The filing deadline for all 2021 filings is April 15, 2025.

Employee Retention Credit deadlines.

The ERC is not available for tax years 2024 and beyond, but you can retroactively apply if you haven’t yet taken advantage of this credit. Businesses could receive a credit of up to $5,000 per employee in 2020 and $7,000 per employee per quarter in 2021. So it’s definitely worth paying close attention to the deadlines to make sure you don’t miss out on this opportunity to significantly lower your tax bill.

Each tax year has its specific deadline. This gives you time to focus on one application at a time since each tax year requires its own form to support the different eligibility requirements. 

ERC deadline for the 2020 tax year.

The Employee Retention Credit deadline for the 2020 tax year is April 15, 2024. This applies to all three eligible quarters: Q2, Q3, and Q4. The first quarter doesn’t count since COVID-19 mandates didn’t begin in the U.S. until the end of the first quarter. 

ERC deadline for the 2021 tax year.

The ERC deadline for Q1, Q2 and Q3 for the 2021 tax year is April 15, 2025. This gives you time to gather documentation for a robust application. But it’s still smart to apply as soon as possible, especially since the IRS is reporting a backlog in reviewing applications. In other words, the sooner you apply, the sooner you’re likely to get approved and receive your credit funds (or have them applied to an outstanding tax bill).

Overview of ERC eligibility.

Before applying for the Employee Retention Credit, make sure your business qualifies for 2020, 2021, or both. The basic eligibility criteria vary from year to year.

For the 2020 tax year:

• No more than 100 employees
• A government mandate prevented operations, either in hours or service capacity, OR revenue was less than 50% of 2019 gross receipts

For the 2021 tax year:

• Fewer than 500 employees
• A government mandate prevented operations, either in hours or service capacity, OR revenue was less than 80% of 2019 gross receipts

Newer businesses may also qualify for the ERC as a recovery startup business. In order to qualify, your business must meet the following requirements:

• Began after February 15, 2020
• Annual gross receipts under $1 million
• One or more W2 employees 

How to apply for the ERC.

Lendio is here to assist small businesses with their ERC applications. We can help you quickly streamline your application with a step-by-step guided form that removes all the guesswork from the process. In fact, to date, our tax partners have helped Lendio clients collect over $300 million from the ERC program.

_{Information provided on this blog is for educational purposes only, and is not intended to be business, legal, tax, or accounting advice. The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. While Lendio strives to keep its content up-to-date, it is only accurate as of the date posted. Offers or trends may expire, or may no longer be relevant.}