If you have your own business, taxes might be one of the most important things on your to-do list. In the U.S, getting your tax return exactly right is essential to saving your company money, running everything smoothly and avoiding fines. There are also some credits and refunds provided by the IRS in certain situations which provide funding to make your financial circumstances a little bit easier.
One of the most recent credits added to this list is the Employee Retention Credit (ERC). This is a refundable tax credit under the IRS which was originally created under the CARES Act to assist business owners in recovering from the effects of Covid-19.
The idea was to reward businesses for retaining their workforce throughout Covid-19, despite the restrictions on working hours that were imposed by the government. If you continued to employ and pay everyone throughout this time, at a financial detriment to yourself, then the IRS allows you to claim for those wages that you’ve paid out. This means that you didn’t lose out too much during lockdowns and your employees have managed to keep their position – helping the job market overall.
The ERC can be a complex concept though, especially as it goes hand in hand with your tax return and other credits that you may need to consider. Throughout this article we’ll look at how the ERC works, how to apply for it, and specifically, how long it takes to receive the credit once you’ve applied.
How Long Are ERC Refunds Taking – Summary
The ERC refund process typically takes anywhere between 16 to 24 weeks to arrive in your bank account. However, this is just an average and certain things can delay this process. For example, any errors or issues with your tax return could mean that the IRS needs to make amendments, which may delay your refund.
How To Check the Status of Your ERC Refund
Once you’ve filed your tax return, you’re bound to be eagerly awaiting your refund. The good news is that there’s a simple way to check the status of your refund without too much effort.
Just log onto the IRS website and select the “Where’s My Refund?” tool. This tool is updated every 24 hours, meaning you’ll get the most accurate information on the status of your claim.
Remember that paper-based filing will take longer to process, so while your status will be updated within 24 hours of your filing online, it could take as long as 4 weeks for a paper-based form to be updated manually.
How Long You Have To Wait Until You Get Your ERC Refund?
Once your refund has been processed and approved, it can take anywhere between 4-6 months to receive it. Due to the significant demand for ERC filings, be prepared to wait an extra couple of weeks for this to be processed and sent to you as a check.
As a paper-based return, ERC Filings require more human review, there’s also a chance that your refund could take longer than typical returns.
ERC Refunds Timeline Slowed by Paper Processing
Paper based processing inherently relies on human involvement. People in the office will need to check every individual detail and number on your form. This information can be automated if checked online.
This means that manual filing typically takes much longer. However, that isn’t the only issue. In periods when manual returns are coming in thick and fast, the office will be busier, slowing down the rate of processing. With that human element, you may also need to allow for periods of absence or sickness within the IRS department, which could lead to further processing delays.
Please also remember that the IRS themselves were affected by Covid-19 and, although they are recovering now, they are faced with a backlog of processing due to imposed social distancing measures in their workplace.
While paper processing will work fine for your return, you should be prepared to wait a little longer for your refund to be processed than you would with electronic.
Understanding the ERC Refund Processing Time
There are lots of factors to consider when it comes to the processing speed of your ERC. We’ve already learned that paper-based filing is much slower than electronic filing. However, your refund could also be delayed if your tax return isn’t filed correctly or has errors in it. This is because the IRS may need to contact you and require extra time to correct the issues.
Understanding these issues and triple checking your return before you file could make all the difference in your processing timeline. This is why you should consult an ERC Benefits advisor experienced in preparing these types of claims.
How To Avoid Delays In Getting Your ERC Refund
Here are a few essential things to consider when trying to expedite your refund:
- File as early as possible: Filing as early as you can gives you the opportunity to avoid peak periods of returns flying in so your return can be processed faster.
- Accurate returns: Your tax return needs to be completely correct in all areas. Any errors could slow down your processing time while they’re checked and amended.
- Substantiated, organized filing – working with an ERC Benefits advisor means that everything will be submitted formatted by IRS standards and ready for their review. This speeds up the process as well because there will be fewer requests for information. Being upfront and organized is important.
What To Do If You Find The ERC Process Is Daunting
The Employee Retention Credit process can be a little scary, as it’s a totally new process that requires you to meet specific criteria to be eligible. However, it’s definitely worth looking into it, as you could be eligible for up to £26,000 per employee depending on your circumstances.
Remember, you do need to file correctly to avoid further delays, so it is important that you get everything in place by following the exact procedure. We understand that this can be a daunting thing to do, and we recommend that you talk to us about helping you get your refund. The first step is to determine if you are eligible for an ERC Tax credit. You can find out instantly by completing the form on our “Get Started” page.
If you’re concerned about how to file or worried about making an error that could damage your return, contact us today at: (561) 680 4677. Our team are experienced professionals and are able to help maximize your refund and get it processed in the fastest timeframe.
Conclusion
The Employee Retention Credit can seem a little daunting, especially if you’re new to filing. The final refund can also be influenced by a variety of factors that you should be aware of before making a claim.
Remember, the way you file, when you file and the information you add on your tax return are all contributing factors to how much of a refund you’re due and how quickly you receive it. If you aren’t too sure about filing and need that added support for peace of mind, contact an ERC Benefits advisor to help you get the most out of your ERC refund.
After overcoming so many challenges during the pandemic, we know that every penny counts to help you get back on your feet!
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