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ERC Loan Application: Full Guide To
Tax Credit Opportunities

Apply for the Employee Retention Tax Credit in 2023

In this article, we will cover everything you need to know about the Employee Retention Credit (ERC) and how to apply for it in 2023. We will discuss eligibility criteria, application process, and benefits for your business.

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Understanding the Employee Retention Credit (ERC)

What is the ERC and its purpose?

The Employee Retention Credit (ERC) is a refundable tax credit designed to encourage businesses to keep employees on their payroll during the COVID-19 pandemic. 

The purpose of the ERC is to provide financial relief to businesses that have experienced economic hardship during the pandemic and to help them retain employees.

How does the tax credit program work?

The ERC program works by providing a tax credit, in the form of a refund, on a per employee, per-quarter basis. The credit is applied against the employer's share of Social Security payroll taxes. 

If the credit exceeds the employer's tax liability, the remaining amount is refunded to the business owner.

ERC vs. PPP: Key differences

The Employee Retention Credit is different from the Paycheck Protection Program (PPP), which provides loans to businesses to help maintain their workforce. The main difference between the two programs is that ERC provides a tax credit, while PPP offers forgivable loans. 

Both programs aim to help businesses keep their employees during the pandemic, but there are distinct eligibility requirements and application processes for each.

Qualifying for the Employee Retention Tax Credit

Eligibility criteria for businesses

To be eligible for the ERC, businesses must meet specific requirements, such as experiencing a significant decline in gross receipts or having their operations partially or fully suspended due to government orders related to the COVID-19 pandemic. 

Additionally, businesses that received a PPP loan may qualify for the ERC under certain circumstances.

What are qualified wages and per-employee limits?

Qualified wages include wages paid to employees during the pandemic and include a portion of healthcare costs. The per-employee limits for the ERC vary depending on the year and quarter in question. 

In 2021, the limit was $7,000 per employee per quarter, while for 2023, it may be subject to change.

Impact of PPP Loans on ERC Eligibility

Receiving a PPP loan may affect a business's eligibility for the ERC. Generally, businesses that received a PPP loan may not claim the ERC for the same qualified wages. 

However, it is essential to consult with an ERC expert or the Internal Revenue Service (IRS) to understand the specific implications of having a PPP loan on ERC eligibility.

Claiming the Employee Retention Credit for 2021 and 2023

Calculating the ERC for 2021

To calculate the ERC for 2021, businesses must determine the eligible wages paid during each quarter of 2021, then multiply those wages by the applicable credit percentage. The maximum credit amount per employee in 2021 was $28,000, with a maximum refundable tax credit rate of 70%.

Changes in ERC rules for 2023

As the pandemic situation evolves, the rules surrounding the ERC may change for 2023. Business owners should stay updated on the latest information from the IRS and seek professional assistance to ensure they claim the appropriate credit amounts.

Maximum credit and refund amounts

The maximum credit and refund amounts for the ERC may also change for 2023. It is crucial for businesses to stay informed of these changes to maximize their tax credit and refund potential.

How to apply for the Employee Retention Credit using Form 941

Filling out Form 941: Key sections explained

Businesses can apply for the Employee Retention Credit by filling out Form 941, which is the Employer's Quarterly Federal Tax Return. Key sections on the form, such as lines 11-13 and 19-21, pertain to the ERC and need to be completed accurately to claim the credit.

Submitting Form 941 to the Department of the Treasury

Once completed, businesses should submit Form 941 to the Department of the Treasury, Internal Revenue Service according to the IRS guidelines. It is essential to file the form promptly to avoid any delays in processing the tax credit and refund.

How to report ERC on payroll tax forms

Businesses claiming the ERC must report the credit on their payroll tax forms, such as Form 941 or other quarterly employment tax return forms, following the IRS guidelines to ensure accurate reporting and processing of the credit.

Taking advantage of the ERC today and its benefits

How does your business benefit from the ERC

Your business benefits from the ERC by receiving financial relief in the form of a tax credit or refund, which can help maintain your workforce and cover payroll expenses, thereby helping your business navigate the economic challenges caused by the pandemic.

Preparing your business for ERC application

Preparing your business for an ERC application involves understanding the eligibility criteria, gathering the necessary documentation, calculating the credit amount correctly, and completing the appropriate tax forms. Ensuring that your business meets all requirements beforehand can streamline the application process and minimize potential errors.

Seeking professional help for ERC matters

As the rules surrounding the Employee Retention Credit can be complex and subject to change, it is highly recommended that businesses seek professional assistance to navigate the application process, maintain compliance, and maximize their tax credit and refund potential.

If everything looks good on both ends following review, then a decision should be made within several weeks about whether or not you qualify for the tax credit grant that was applied for.


Frequently Asked Questions

How do I apply for the ERC application?

To apply for the ERC, you would need to fill out the appropriate tax forms, such as form 941-X, and submit them to the IRS. If you need assistance, it's recommended to contact a tax professional.

What is the ERC refund per employee?

The ERC refund is a tax credit given to employers for each eligible employee's salary and health benefits. The actual amount varies depending on the specific parameters set by the CARES Act and other relevant legislation.

How can small businesses apply for ERC?

Small businesses can apply for the ERC by completing form 941-X and submitting it to the IRS. They may be eligible to claim the ERC credit based on qualified wages and health plan expenses paid for their employees.

Can I still apply for Employee Retention Credit?

Yes, businesses can still apply for Employee Retention Credit if they meet the eligibility criteria, which includes experiencing a significant decline in gross receipts in a quarter of 2019 as compared to the same quarter in 2021.

What can I claim in an ERC application?

In an ERC application, you can claim a credit equal to a certain percentage of qualifying wages and health plan expenses paid to employees. This credit can then be used to offset certain payroll taxes.

What is an ERC tax refund?

An ERC tax refund is amount that a business can be reimbursed through claiming the Employee Retention Credit. This refund may result in a refunded payment from the IRS if the credit exceeds the business' total payroll tax liability.

Can I claim the ERC credit for shut down due to COVID?

Absolutely, if your business was forced to suspend operations due to COVID-related government orders, you may be eligible to apply for the ERC and claim your tax credit.

What benefits can I get from applying for the ERC?

Businesses that apply and are approved for the ERC are typically entitled to a tax credit against certain payroll taxes. This tax credit can help businesses offset the cost of keeping their employees on payroll during periods of economic hardship.

How does the quarter in 2019 affect my ERC claim?

The specific quarter in 2019 can affect your ERC claim because the eligibility for the ERC tax credit, under certain circumstances, is dependent on a significant decline in gross receipts in a quarter of 2021 as compared to the same quarter in 2019.

Can I learn how to apply for ERC myself?

Yes, it is possible to learn how to apply for ERC yourself. The IRS provides detailed instructions and guidance materials to help businesses understand what the ERC is available for and how to apply.


In conclusion, the Employee Retention Tax Credit (ERC) is a valuable resource for businesses seeking financial relief and assistance in retaining their employees during the COVID-19 pandemic. 

By understanding the eligibility criteria, calculating the credit accurately, and completing the necessary forms such as Form 941, businesses can take advantage of the ERC and benefit from the tax credit or refund it provides.

It is important for businesses to stay updated on any changes in ERC rules and maximum credit amounts for 2023, as well as consult with professionals or the IRS to ensure compliance and maximize their tax credit potential. By leveraging the ERC, businesses can navigate the economic challenges caused by the pandemic and maintain their workforce effectively.