Finally, our clients are now receiving IRS Notices as well as checks from the IRS for the Employee Retention Tax Credit based on the paperwork we prepared and our clients signed and submitted months ago. The good news is that it appears that the IRS is processing the 941-X forms we prepared last fall AND also the 941-X forms submitted earlier this winter. Hopefully that trend continues and the IRS will keep turning around these payroll tax refunds in just a few months.
What to do if you already received your ERC:
- Please forward us a copy of the IRS Notice you received regarding the ERC that includes the wording “Changes to your 941. Overpayment: $xx,xxx”, if you haven’t already done so.
- We will check to make sure that the amount of the ERC agrees with the paperwork we prepared
- Deposit that check for the ERC into your practice bank account.
- Categorize the deposit as Other Income in your QuickBooks
- If your practice has been in existence for more than 4 years, the practice can write you a check for the full amount of the ERC received
- Categorize the check as a Shareholder Distribution or as Owner Draw
- If your practice has been around for less than 4 years, there could be tax issues around taking distributions, so please wait until our next meeting this spring or summer so we can discuss how best for you to take the ERC
- If the ERC is for 2020, we’ll be preparing an amended 2020 tax return this summer for you to pay the taxes due on this tax credit which will be reported as a decrease to deductible wages. Expect to owe taxes of about 35% of the ERC received with the amended tax return.
- If the ERC is for 2021, we most likely already included the full amount of the ERC as on offset to wages on your 2021 tax returns so no amended tax return should be necessary.
What to do if you have not received your ERC yet:
- Determine whether you signed and mailed the paperwork that we prepared for you to the IRS.
- If you still need to mail in the paperwork, don’t worry, there is plenty of time to do so.
- Please locate the 941-X form we mailed to you and also uploaded to your client portal.
- Sign on Page 5 of the 941-X.
- Mail in all 5 pages of the 941-X to the address on the instruction letter.
- If you can’t locate the paperwork, we can resend the documents to you.
- If you’re waiting for us to prepare the ERC paperwork, please reach out to your Client Manager or email firstname.lastname@example.org.
We are glad that we were able to help many of our dental and medical practice clients get the full amount of the ERC that they were entitled to receive. If you have any questions about the ERC or still need us to prepare the paperwork for you, please email email@example.com.
ERC-AMENDED 941’S WERE FILE IN 2022 FOR 2020 AND 2021.
ACCEPTANCE LETTER WAS RECEIVED IN SEPTEMBER 2022.
THE 2020 S-CORP RETURN HAS BEEN FILED
THE 2021 S-CORP RETURN HAS NOT BEEN FILED AS YET.
DO I REPORT A REDUCTION IN WAGES ON THE 2021 TAX RETURN?
DO I FILE AN AMENDED 2020 TAX RETURN?
OR DO I REDUCE THE 2022 WAGE WHEN THE 2022 TAX RETURN IS DUE?
THANK YOU SO MUCH FOR YOUR ASSISTANCE