The IRS recently added five FAQs about the employee retention credit (ERC) that mainly address how to handle the pandemic-era credit on tax returns under various scenarios.
The ERC was generally available to eligible businesses from March 31, 2020, to Sept. 30, 2021, and to Dec. 31, 2021, for recovery startup businesses. The deadline to file 2021 ERC claims in Tuesday, April 15.
The newly added FAQs cover:
- Does the ERC affect an income tax return?
- Should a taxpayer have reduced the wage expense on their income tax return when filing for the ERC?
- What do taxpayers do when they claimed the ERC but did not reduce wage expenses on the income tax return, and the ERC claim was paid in a subsequent year?
- What can taxpayers do if the ERC claim was disallowed but they had already reduced the wage expense on their income tax return by the amount of the ERC they expected?
- How does someone report ERC fraud?