Does Employee Retention Credit Owner Wages Count Towards Refund?

The ERC tax credits have been extremely helpful to businesses getting money back from their payroll taxes. Employers get up to 50% back from W-2 payroll employees. But does the Employee Retention Credit owner wages count. Well, this depends on the percentage of ownership and some other factors. Let’s dig deeper and see if this is applicable to your business.

Employee Retention Credit to the Rescue

As the pandemic hit in 2020, businesses scrambled to make sense of the economic landscape. Many startups that had begun their journey wondered how to keep afloat. This pushed most business owners to let their employees go.

However, the IRS introduced the Employee Retention Credits to encourage businesses to retain more employees and reward them for keeping them on during hard times. This allowed businesses to get tax credits on wages paid to employees retained during the pandemic. 

Yet, many complicated hurdles existed before business owners could receive ERC benefits. For example, the Employee Retention Credit Owner Wages calculation differed significantly from wages for other employees. 

Employee Retention Credit Owners Wages Updated

The updated set of rules published by the IRS allowed many small business owners to benefit from the hardships they faced during the pandemic. You can still apply for Employee Retention Credit even if you filed through Form 941. 

However, some owners cannot apply for Employee Retention Credits based on their own wages. This can make the process complex and confusing for most. Luckily, there is an easy way out. Trusting an ERC specialist can solve most of your problems and let you apply for the benefits you deserve. 

The ERC owner’s wages eligibility discussed in the following sections can shed light on how you can determine whether you should apply.

Eligibility for ERC Owner’s Wages

Who is eligible to receive Employee Retention Credit owner wages benefits? Can all business owners apply? The answer is no. Only some can reap the benefits of this act.

For example, you must remember that a majority shareholder or owner cannot qualify for the ERC. Calculating whether you are a majority owner can be hard. For example, if you have two direct relatives in the company who own 50% each, you might become a majority owner by the attribution laws. 

Navigating these tricky scenarios requires a trained professional and years of experience. Getting your payroll evaluated by an ERC specialist is essential as you don’t want to miss the ERC opportunity. 

Some of the owner’s wages that qualify include;

• Owners that own less than 50% of the company
• More than one owner who owns less than 50% of the company (given that the combined ownership of two or more immediate family members doesn’t exceed 49%)

IRS ERC Updates

The rules and regulations added to the ERC calculations are included in an update published on 4 August 2021. This contained Notice 2021-49, which stated that the majority of owners of S-corporations and C-corporations could not benefit from ERC. Owner’s wages did take a massive hit during the pandemic, so the fact that the IRS was unwilling to provide an ERC for the same was confusing. 

However, owners soon realized that more than one majority of owners could take away a large percentage of ERC that could have been allotted to other businesses. 

Family Members of Majority Owners Who Don’t Qualify

Remember that the wages of a spouse of a majority owner can only be considered qualified if the owner has no other relative. This includes siblings, ancestors, or descendants. Go through the list below for the family members that are considered relatives of the owner;

• Children
• Children’s Children
• Stepchildren 
• Brothers, sisters
• Parents or grandparents
• Nieces and nephews
• Aunts and uncles
• Mothers and fathers in law

Why You Need an ERC Specialist Can Help

The ERC benefits might pull you out of that financial rut if your business suffered during the pandemic. However, making a mistake while filling for ERC owner’s wages can add penalties to an otherwise massive list of costs. 

Considering the IRS keeps changing many rules and regulations, it is best to get in touch with an ERC specialist who is experienced enough to help you through it all. A trained eye that knows the intricacies of the updated 941X Form can be the best aid to guide you in the right direction. 

Moreover, ERC specialists don’t just help you during the process. They can also prepare you before applying for ERC and organize your payroll so that you receive the maximum benefits. Moreover, they can ensure that once you have fulfilled all requirements, the ERC checks are deposited smoothly. 

Taking Action With ERC Before It’s Too Late

The ERTC deadline was recently extended to April 2025, depending on the quarter you are amending. As a business that suffered losses during the pandemic or other pertinent situations, you can apply for benefits till 2025. If your business suffered partial or full closure and a significant financial loss during the pandemic, the ERC under the CARES Act is the answer to some of your financial problems. 

You might be unable to replace everything your business lost during the pandemic. However, by trusting our ERC experts and filing for those benefits in time, you can get the help you require to get back on your feet and on your way to success once again. 

If you are wondering whether it is too late and hesitating due to the complicated procedure, don’t worry. We are here to take you through it all. Take the first step and apply!

Federal Tax Credits ERC Assistance

Have you had difficulties determining if your business qualifies for the Employee Retention Credit or Employee Retention Tax Credit?

Federal Tax Credits ERC is here to answer any of your questions, offer assistance, and even provide a complimentary ERC Qualification Check.

Our team of ERC Experts offers white glove service for tax filing, amending returns, determining eligibility, and how to file for the ERC program.

The time is now to get your Employee Retention Credit while the tax credits are still in place. The program is still available but won’t be around for too much longer.

Get the tax credit your business is entitled to and receive game-changing money back to be used for whatever you choose. Remember, this is not a loan and does not need to be paid back.

Contact Federal Tax Credits ERC now, and let us help you receive your business tax credits.