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How Does Employee Retention Credit Affect Your Income Tax Return 

 December 12, 2023

By  Jace W Campbell, CPA

Employee Retention Credit Affect Your Income Tax Return

Employee Retention Credit (ERC) is an essential concept for business owners and financial professionals. Its impact on your income tax return can be substantial…but understanding how it works, its qualifications, and potential risks is crucial.

What is the Employee Retention Tax Credit (ERC)?

The Employee Retention Tax Credit (ERC) is a refundable tax credit under the CARES Act designed to encourage businesses to keep employees on their payroll during the economic hardship caused by the COVID-19 pandemic. But what does it mean to your income tax return? Let’s dig deeper…

ERC directly reduces the amount of federal employment taxes you owe. If the credit exceeds the total tax liability, you receive a cash refund…a benefit that can have a profound effect on your income tax return. However, claiming this credit requires meeting specific criteria, which we will delve into next.

How Confident Are You In Your ERTC Eligibility?

Watch Our Video Explaining the Fraud We’ve Seen From National ERC Promoters

Also read: How Do Employee Retention Credits Work?

Qualifying for ERC: A Closer Look at the Basics and Common Missteps

Understanding the criteria for Employee Retention Credit (ERC) qualification is crucial. To be eligible, a business must either:

1. Undergo a full or partial shutdown due to governmental COVID-19 orders.

2. Experience a significant decrease in gross receipts compared to 2019 levels.

However, these basic qualifications require further examination…

For instance, businesses reporting decreased gross receipts often link their decline to the more than nominal impact of governmental orders partially suspending their operations. When the pandemic initially hit in 2020, many businesses were partially suspended as state governments worked hard to contain the outbreak…

Consequently, such businesses might have qualified for ERC only for a short period in 2020. However, they may continue to qualify in 2021 if they recorded a 20% decline in gross receipts compared to 2019—even though most government restrictions had been lifted by then…

Navigating these waters can be complex…and it’s not uncommon for companies to make mistakes when determining their ERC eligibility.

One of the most common errors lies with overlooking Aggregation Requirements. Many organizations unknowingly violate IRS regulations because they fail to consider all entities under common control when calculating eligibility—these include parent companies, subsidiaries, or other related entities…

These missteps can trigger IRS penalties…reinforcing why a proper evaluation of eligibility is paramount when claiming ERC.

In essence, while the basics of qualifying for ERC may seem straightforward on paper—the reality involves careful navigation through complicated guidelines and avoiding common errors like overlooking Aggregation Requirements. The best way forward? Seek professional guidance to ensure compliance and protect your business from potential IRS disputes or penalties…

The Dark Side of ERC: Deceptive Practices

Despite its benefits, there are unethical practices associated with ERC— firms luring businesses with promises of large credits without fully explaining qualifications or potential risks. Falling victim to such deceptions not only compromises your eligibility but could also lead to severe financial penalties…

By now, you might be wondering who you can trust when dealing with ERC? The answer lies in choosing professional guidance committed to transparency and ethics.

Why Choose JWC ERTC Advisory CPA?

The landscape of ERC is fraught with complexities and potential pitfalls. That’s where JWC ERTC Advisory CPA comes in. We are not just another firm offering ERC services…our approach is centered on thorough eligibility reviews, ensuring that every claim we handle aligns with IRS guidelines

We understand the fears and uncertainties that come with navigating tax credits and the potential gains you seek. We assure you, with JWC ERTC Advisory CPA, you’re not just getting a service—you’re gaining a partner committed to your financial wellbeing.

The IRS Cracks Down on ERC Fraud: Why Integrity Matters

The Internal Revenue Service (IRS) has turned a discerning eye towards ERC fraud, actively cracking down on firms making unqualified claims. The penalties for such transgressions can be severe—underscoring the importance of choosing an ethical advisory like JWC ERTC Advisory CPA

But let’s delve deeper into this issue…

In a landscape cluttered with aggressive tax promoters and questionable practices, how can you ensure transparency, integrity, and accuracy in your ERC dealings? How can you shield your business from potential IRS backlash?

The answer lies with JWC ERTC Advisory CPA and our unique approach—the Ironclad Integrity Initiative.

We’re not just any accounting firm…we’re the nation’s first and only registered accounting firm specializing exclusively in ERC. Our singular focus sets us apart—we don’t offer income tax preparation, audits, or bookkeeping services…ERC is all we do.

But it’s more than just what we do—it’s also about how we do it…

Our Ironclad Integrity Initiative isn’t just a catchphrase—it’s the bedrock of our operations. Comprising three core pillars, this initiative demonstrates our commitment to transparency and integrity by highlighting how we engage with our clients.

With JWC ERTC Advisory CPA, you gain more than an advisory service—you secure a partner devoted to protecting your interests amidst the rigorous scrutiny of the IRS crackdown on ERC fraud.

Remember, in the complex terrain of tax credits like ERC, where potential pitfalls abound…your choice of advisory can make all the difference. Choose wisely…choose integrity…choose JWC ERTC Advisory CPA.

Also read: Can Individual Taxpayers Claim the Employee Retention Credit if They Kept Working?

Summing Up

In conclusion, while the Employee Retention Credit can provide significant benefits for eligible businesses, understanding its impact on your income tax return, qualifications, and potential pitfalls is crucial. With professional guidance from an ethical firm like JWC ERTC Advisory CPA, you can navigate this complex terrain with confidence…

Jace W Campbell, CPA


Jace founded JWC ERTC Advisory CPA in March 2021 as the nation's first and only public accounting firm focused solely on ERC . . . and nothing else. He has personally signed over 9,000 ERTC claims and is proud to be executing these claims conservatively, and how intended by Congress.

He has a passion for educating clients so they can make the best decision for themselves.  If you read articles and watch videos that Jace produced in 2021, his approach is the same now as it was then.

While other firms pivot their messaging to comply with new IRS guidance, Jace continues preaching the same conservative principles that have helped clients recover hundreds of millions . . . while sleeping easy at night.

related posts:


Can You Claim Employee Retention Credit in 2023?


Can You Claim the Employee Retention Credit in 2022?


Employee Retention Credit Scams: What You Need to Know

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