Yes, but not in the direct way you might think. The ERC refund you receive will increase your taxable income in the applicable tax years as it reduces the tax deduction taken for payroll wages on your originally filed income tax returns. This requires you to amend your prior year's business tax returns to report the increased taxable income, and any ERC refund received must be claimed on the income tax return year that corresponds with the payroll tax return year that was amended. Any ERC refund claimed on 2020 941Xs will be reported on an amended 2020 Income Tax Return, while any ERC refund claimed on 2021 941Xs will be reported on an amended 2021 Income Tax Return.

For example, let's assume salaries and wages were $100,000 in the 2020 tax year and $120,000 in the 2021 tax year. After completing the ERC study, it was determined the client qualified for a $50,000 ERC credit in 2020 and a $20,000 ERC credit in the 2021 tax year. In this case, the 2020 tax return for the business would be amended to reduce the salaries & wage deduction claimed on the originally filed tax return by $50,000, thus increasing taxable income for that year by $50,000. The same cadence would apply to the 2021 tax year.

Any wages paid to qualifying employees after March 12, 2020, and before January 1, 2022, can qualify. Note that 1099 payments made to contractors do not qualify.

The ERC can be claimed for all full-time employees (30+ hours per week) for small employers (defined as 100 or fewer full-time employees for 2020 and 500 or fewer full-time employees for 2021). If your business is larger than that, you can only claim ERC for wages paid to employees for not working.

Wages paid to greater than 50% owners or their relatives are ineligible for the Employee Retention Credit, and it’s important to note that self-employment earnings are also not considered qualified wages.

Once you qualify and file your Employee Retention Credit claim, the U.S. Treasury will send a refund check in approximately four to six months.

No, you don’t. It’s like getting a tax refund—you simply cash the check that the IRS sends you.

In select circumstances, Dark Horse has partnered with Get My Funds LLC (GMF) to enhance the process of identifying and qualifying clients for the Employee Retention Credit (ERC). At Dark Horse, we handle credit calculations and payroll tax return filings, while GMF assists with qualification and administration aspects. Our collaboration with GMF is based on our mutual commitment to transparency and regulatory compliance. This partnership ensures that credit calculations adhere to the tax code, while providing clients with a streamlined and efficient credit calculation experience.