Navigating the complexities of the tax credit for the Employee Retention Credit (ERC) can be daunting. Ever-changing legislation and intricate eligibility criteria often leave many businesses perplexed about the ERC tax credit. However, understanding and leveraging this credit can provide substantial financial relief. In this comprehensive guide, we’ll debunk prevalent myths surrounding the ERC program and provide actionable tips to help you make the most of this opportunity.

Myth #1: You only qualify for the ERC if your business completely shuts down.

Many businesses think they can’t claim the ERC because they remained operational throughout the pandemic. Not true! You can still qualify even if you partially suspended operations due to government orders or experienced a significant decline in gross receipts compared to the same quarter in 2019.

Myth #2: No ERC if my business didn’t experience a revenue decline.

This is another misconception. You only need to meet one of the following criteria to qualify for the ERC:

  • Significant decline in gross receipts: A 20% or more drop compared to the same quarter in 2019.
  • Full or partial suspension of operations: Due to government orders related to COVID-19.
ERC Tax Credit Payroll Manager

Myth #3: The ERC Tax Credit program excludes essential businesses.

While generally true, there’s an important exception. If government orders forced an essential business’s suppliers to shut down, impacting its ability to operate normally, you may still qualify.

Myth #4: Receiving PPP loan forgiveness disqualifies me from the ERC.

Initially, this was true. However, regulations changed, allowing businesses that received PPP loan forgiveness to also claim the ERC for eligible wages. Remember, you cannot use the same wages for both programs.

Myth #5: It’s too late to claim the ERC Tax Credit.

While the eligibility period for calculating the credit has ended, you still have a three-year window to file amended tax returns (Form 941-X) to claim the credit. Remember the two limitations for filing amended returns:

  • Three years from the original Form 941 filing date.
  • Two years from the date the taxes reported on Form 941 were paid.

Myth #6: I checked before and wasn’t eligible, so there’s no point in re-evaluating.

Pandemic-related legislation was fast-paced and constantly evolving. What might have disqualified you earlier could now make you eligible. Since the ERC can be worth up to $26,000 per employee, it’s definitely worth revisiting your eligibility.

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Seeking Professional Help for the ERC Tax Credit is Key

The ERC program can be complex, debunking common myths surrounding the tax credit is essential for businesses seeking financial relief. Partnering with a knowledgeable financial professional can streamline the eligibility assessment process, ensuring businesses don’t overlook lucrative opportunities. With the potential for significant financial benefits, it’s crucial to stay informed and capitalize on available resources. Don’t let misconceptions hinder your access to vital financial support—unlock the full potential of the tax credit today.


The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.