Even if you didn't qualify for PPP loan forgiveness, you may still qualify for the Employee Retention Credit (ERC) for 2020 wages. And if you did qualify for a PPP loan, If your loans have been repaid, you may be newly eligible for ERC. We’ll just need to amend your 941 return for the applicable quarter(s) in 2020. To do this, you’ll first need to give us a little information and a copy of the Form 7200 you filed with the IRS.
What we’ll cover
- Be sure you've filed form 7200
- Run an Employee Summary report
- Using the report to verify eligibility
- Send us a copy
- We’ll handle the rest!
Be sure you've filed Form 7200
If you haven’t yet filed the March 2020 version of Form 7200 to request an advance payment of employer credits due to COVID-19, it might be too late to do so.
Form 7200 must be filed either before the Form 941 is filed for the quarter in question, or before to the due date of the quarterly return.
Be sure you’ve checked all applicable quarters on the form you filed. A separate 7200 must be filed for each eligible quarter.
Confirm the number of eligible employees you’re claiming.
Note: This number is important, and these employees must be eligible. You can check employee eligibility by running an Employee Summary Report.
Make extra copies
You'll need to keep at least two copies of this form: one for your records, and another copy to send to us. We need this copy in order to amend your 941 for you.
Note: If you haven't filed Form 7200 yet, or need to correct information on your submitted form, consult the IRS before proceeding.
Run an Employee Summary report
The Employee Summary will verify that the information on form 7200 matches your payroll history during the applicable period. You can set your report “From” and “To” dates yourself, or just select a popular time frame like “Fourth Quarter Last Year”.
You’ll use this report to confirm how many employees can be counted toward the credit. For example, let's say you were to claim that in Q4 of 2020...
...you retained four employees...
...and are requesting a total credit of $20,000.
How's that math work?
$10,000 ÷ 2 x (# of employees) = (Part II line 1)
The ERC allows you to get a credit of 50% of an employee's pay if they have $10,000 in qualified wages. So if you have four employees with $10K in wages, you'd calculate $10,000 ÷ 2 x 4, and enter $20,000 in line 1.
Using the report to verify eligibility
For our example, we need to verify that for 4th quarter of last year (10/1-12/31/2020), there really were four employees that each made at least $10,000. The Employee Summary report shows these totals.
Send us a copy
Email a copy of the completed Form 7200 to firstname.lastname@example.org. Without a copy of the 7200 you filed with the IRS, we will not be able to verify that the information in the form aligns with the payroll data in OnPay to amend your 2020 941. This can result in a denial of this credit.
We’ll handle the rest!
Once your Form 7200 copy is in our hands, we’ll confirm that your figures are correct and eligible, correct your 2020 Form 941 for the applicable quarter, and complete your 941-X based on the corrected 941 and the one we originally filed. Last, we’ll send you your corrected Form 941 and amended Form 941-X for your records.