AmiSight 4/7: Be Careful When Claiming the Employees Retention Credit on Your Taxes
Updated: Apr 10
As Tax Day inches closer, the IRS is reiterating its warning to businesses to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit that was set in place due to the pandemic. It looks like third-party companies are trying to make a quick buck by encouraging ineligible people to use the credit. The schemes, broadcast on the radio and online, charge large upfront fees or a fee that is contingent on the amount of the refund. While many businesses do their due diligence before claiming the legitimate credit, promoters of the scheme may not inform taxpayers that wage deductions claimed on the business' federal income tax return must be reduced by the amount of the credit. The ERC, a refundable tax credit, was created for businesses who continued paying employees while shut down due to the COVID-19 pandemic or who had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021. To learn more about the credit’s qualifications and how to protect yourself from a scheme, click here.