Check out 941-X For Employee Retention Credit
- Written by NewsServices.com
It is everybody’s favorite time of year…tax season. With it comes a whole lotta stress, frustration, and maybe even tears. For small businesses, it’s even more of a pain.
For one thing, we have to make sure all of our employees get their paperwork and documents in a timely manner. After all, that’s going to be a big part of sorting out your own filing, especially when it comes to the employee retention credit. Doing all of this is hardly something that I look forward to each year, but there are some tools out there that can make it a bit easier, at least.
The hard part comes when you have to sort out your own forms. A lot of new ones have been introduced in the wake of the covid 19 pandemic, but don’t worry – most of them are pretty simple. Prior to 2022, we had Form 941, but now it’s become 941-X. If you’re not sure how it works, that’s what I’ll be explaining.
What is the Employee Retention Credit?
First things first – let’s examine what the ERC is, anyway. Most folks are already aware that it originated back in the 2020 tax season, when the employment rate here in the United States was skyrocketing like crazy. They were numbers that we hadn’t really seen since the Great Depression, and that was really scary.
That’s probably why the government stepped in and started to think up some potential solutions for the problem. Naturally, those were forms like the form 941-X. What do they entail, then?
The goal of the feds when they made these forms and credits was to help the out small businesses that needed assistance when they had to close down and lose all of their revenue. There’s an explanation of that here, https://www.forbes.com/sites/forbesfinancecouncil/2022/06/21/what-is-the-employee-retention-credit-erc-2a, although I think most of us are already familiar considering we lived through it.
The ERC (Employee Retention Credit) was designed to reward any businesses that kept on a certain percentage of their employees even at the height of the quarantine. This was kind of contingent on whether or not you paid them wages and covered health insurance costs as well, though, so keep that in mind if you’re looking to apply for this credit.
Something to note is that technically, this program ended in 2021. However, there are still tons of organizations that haven’t actually claimed theirs yet even though they’re eligible. That’s why there’s an addended form to fill out now.
It can get sort of confusing, though, when you’re actually looking at it. You may need professional help going through form 941 x instructions so you can fill them out correctly. There are a lot of websites and companies online that can help you work through it. Think of an accountant, but specifically to help you out with the ERC.
Has it Helped?
Let’s say you’re one of those businesses that I mentioned earlier that haven’t filed for their ERC yet but are pretty sure that you qualify – is it going to be worth the hassle? Has it actually helped people, or it just something that the government did to try to pacify or reduce the total economic destruction that was happening in 2020?
Speaking from personal experience, I can say that it really helped me with my little shop in my hometown. I was having a real hard time paying the bills when everything shut down, but I didn’t want to leave my employees hanging, either. Blogs like this one offer some additional testimonials if you’re still not convinced, of course, and might be worth the read.
Overall, I think it’s safe to say that yeah – the ERC did its job in reducing the pressure on small business owners when they had to be shut down due to the quarantine going on. There was way less reason to stay open and potentially endanger peoples’ lives when they were being rewarded for continuing to keep their employees on and pay them, after all, and I like to think that was one of the other main purposes behind it being put into law. Just know it’s still not to late to file if you haven’t!
