I have to say, you not only saved me thousands of dollars (that the payroll company would have charged me to file 941X properly), you also did it in a video that is several times shorter than anything I've seen so far. It was the shortest, most concise, and easiest to follow video out there. THANK YOU!
Blessings to you Candy!!! I am a small payroll clerk struggling with this and finding real resources, not sales pitches!!! THANK YOU!!!!!! YOU ARE A TREASURE!!!!!!
Candy, thank you so much for your step by step guide to completing the 941-X! This is exactly what I was looking for. Every other video on this subject was trying to sell me their 2-hour seminar, or their worksheet, or something - anything besides just walking me through the process. I'm just a Mom, trying to help my son get the ERTC for his small business, started up during CoVID. Your 2 video's allowed me to apply for $82K+ in ERTC; an amount he can definitely use to cover increasing costs. God bless you and your business!
I am so happy to hear my videos helped you! And I'm glad you were able to help your son get cash he can use for his business! I wish him continued success.
Thanks, Candy. Very helpful. I was even able to use these instructions with slight changes for the later 941x form revision. Extremely gracious of you to offer this freely. I don't have words to express how criminal it is for agencies to charge 15-25% fees for this filing with the only rationale that they are helping you mine gold. I would be physically sick if I had paid upwards of $20,000 and then later found out how easy it was to do this myself. Literally took 2 hours for 2 quarters and much of that was triple checking.
Omg I just have to say I absolutely love you. So many companies are charging 15-25% of the refund amount just to process a 941x and with your easy tutorial I was able to do it on my own... We were already on the verge of closing our doors so every penny counts. Thank you do much
@@Caiomhescreation There is no ERTC for 2019. To determine if you qualify for 2020 or 2021, you compare income in one quarter to the same quarter of 2019.
Candy you are an absolute blessing! Like Cathy I was searching for a video with detailed help on completing the 941-X for ERC and all I found was sales pitches. I did a few 941-X for the first couple quarters but I wasn't sure on the 3rd and 4th quarter for my recovery start up businesses. I can't thank you enough for your assistance!!
Hi Candy! I am thankful for your videos. It saved me a lot of time and money. Would you please let me know what documentation needed to attach with Form 941X. I opened my business at the end of Sept 2021 so I only have Quarter 4/2021. Do I need to show revenue of the last 3 months of 2021? I don’t have 2020 income because It didn’t even open at that time. I really appreciate your help.
You don't send any supporting documentation, only the 941-X. And since you qualify as a recovery startup business, you claim just on that, so no other qualification (income reduction or mandatory shutdown) is required.
Candy, these videos are a lifesaver! I am new to business in general (midlife career shift!) and my business (craft beer taproom and restaurant) opened two weeks before Covid. It's been a challenge. Thanks to your help, I have been able to use my reports from Quickbooks payroll and the worksheets online and file my "recovery startup business" ERC credits on my own without having to spend a ton on professional help. Thanks!!
You are so welcome! I am glad you are finding the information I share helpful! I don't know if you feel the need for more support, but I'll be hosting with an attorney a workshop called Smart Start to Your Business and we'll be teaching about legal and financial issues to help you have a successful business. It's FREE! I believe the landing page will be ready in the next day or two. If you are interested, let me know and I can send you the link to the landing page. It will be a 1 hour live training each weekday February 7-11 with the opportunity to ask questions. If you can't make it, we'll be recording it to share after.
This video is the best because I understand and feel comfortable to do it my own. Thanks for teaching me and others to do the job easier than we are expecting! I love this video a lot hehehe...
THEY CHANGED THE RULES AGAIN, NOW ITS WAGES PAID AFTER MARCH 12, 2020 , NEED A UPDATE TO THE UPDATE , but these videos are great ill stich it together from what your giving.
I'm not sure where you heard this is new. Wages from March 12-March 31 2020 have always been allowed for ERTC (claiming on the 2nd QTR 2020 return) and I demonstrate how to do this in the original training video I created in March 2021. Since the updated video is for changes after June 30, 2021, I do not reference it in this video. You can find the steps to claim March wages here: th-cam.com/video/mUrnakfeNvc/w-d-xo.html
Candy what would happen if you only put a simple statement in # 43 such as: “This return is being amended for ERTC purposes.” In this video at 12:30 you stated that you should put the reason why you’re applying as it relates to the 1st or 2nd eligibility criteria, but I’ve read articles that say just put “This return is being amended for ERTC purposes” in area 43. I tend to think less is more in some cases, but I also appreciate what you suggested. Will either statement be fine?
You need to specify why you qualify. Is it due to being shut down? Is it income reduction? However, I tell clients they don't have to be too specific. For instance, if someone is claiming the income reduction, I say they don't need to put "We experienced a 52% reduction of income in the quarter compared to the same period in 2019." Instead, say "We meet the income reduction requirements in this quarter compared to the same quarter of 2019 and therefore claiming the credit". Remember, the IRS has 5 years to audit returns. If you aren't specific enough, you may be selected for an audit (or asked for more information before they even issue you the credit.) In my opinion, it's better to let them know upfront that you are aware of the qualifications and meet them.
Hi Candy, Happy New year ! i wonder if u know anything about CalSavers ..? do all employers need to register as state mandated …? will u make a video about CalSavers program .? thanks for ur help!
Yes, I know a lot about it. I actually held a webinar in December about it (3 sessions which you can view on demand. The first is an overview of the program including the employer and employee responsibilities, the 2nd discusses all the alternatives that allow you to be exempt from CalSavers, and the 3rd is an overview of the portal with screenshots of different sections of the site). I also created a resource guide with the information including screenshots of the CalSavers portal and forms that may be needed. You can purchase all of this for only $97 at bit.ly/3BY9Dp3 I think you will find it very helpful and answer your questions.
Dear Teacher Candy, thanks for your prompt reply. I got it. Please give me an advise , in the PPP forgiveness application, Example: I apply 100% paid for payroll $35,600. Can I recalculate according to the rule of 60% for Payroll and the remaining 40% claim to ERTC? Are all family members not allowed to claim ERTC? Once again, thanks so much and have a nice day!
No, if you filed for forgiveness using 100% wages (and had to show how you used the funds for forgiveness), you may not change it to 60% payroll and use the rest for ERTC. But, if you were one of the businesses that only had to certify you used the PPP funds for allowable expenses without saying what was payroll, return, utilities, etc, and had enough non-wage expenses to go towards PPP, you can do the 60%. If there is a majority owner, no family members specified qualify for ERTC, so put all of those (up to the max allowed) to PPP and non-family employees to ERTC as much as you can. The family members that do not qualify include a spouse, child (or descendent of a child), brother, sister, step-brother, stepsister, father, mother (or ancestor of either), stepfather or stepmother, niece, nephew, aunt, uncle, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
@@CandyMesser Dear Teacher Candy, Good morning! Thanks for your quick reply. I had a friend, he starts business in January-2020. Can he claim ERTC for Recovery Startup Business program? I really sorry to bother you so much. Thanks a lot. Have a Nice weekend!
There is currently no way to e-file amended returns, so they are being mailed (although I recently saw an article that the IRS is going to improve its systems that would allow for amended income and payroll tax returns), but that has not been done yet.
Hello Candy Do you have any videos on helping us to understand the ERC Sick and Family Leave Wages or ERC Sick and Family Leave Credit matters that are on Worksheet 1 of the 941 form? We provide sick/family leave wages but im trying to understand do we count sick leave wages only if there were a certain number of days or hours (or any amount) of sick/family actually leave taken or paid to employees?.Or do we count all sick/family leave wages regardless if it was paid out or not? In other words can we use that credit for wages that are sick/family leave eligible wages or sick/family leave accrued hours (which would equate to wages once used), but not all were taken/paid out. If you have a video can you please post it here? Thank u!
The credit for sick leave on worksheet 1 is not for general sick pay. It was for the Families First Coronavirus Response Act which allowed employers to pay employees if they had to stay home due to exposure to the virus or care for family members. You were able to claim a credit for the employer-paid Social Security Tax. You do not claim it for any regular sick pay you offer. One quick video I did to give an overview can be seen at th-cam.com/video/LHpDoASKcIY/w-d-xo.html. I also wrote a few blogs on this topic which you can read at affordablebookkeepingandpayroll.com/families-first-coronavirus-response-act-faqs/ affordablebookkeepingandpayroll.com/what-to-know-about-the-families-first-coronavirus-response-act/ and affordablebookkeepingandpayroll.com/paid-leave-to-employees-helping-family-get-covid-vaccination/ If you did claim this credit due to paying wages to a worker who was home due to reasons related to COVID, you would reduce the qualified wages for the ERTC as you can't double-dip.
@@CandyMesser you are sooooo freakin awesome! I mean taking time out of your busy day to help your TH-cam listeners. How grand! Thank you so much for the response and I’m just so grateful I found your highly valuable channel!
Thank you for this very helpful video as it was very hard to find reliable information on line. My company had over 20% reduction in income in Q3 & Q4 2021 when compared to the respective Quarters in 2020 but I think I heard you say that you compare to the respective Quarters in 2019. Please confirm that I use Q3 2021 vs. Q3 2019 and Q4 2021 vs. Q4 2019. If it is vs. 2019 and my income rebounded in Q4 2021 and I didn't qualify but then dropped again in Q1 2022, can I claim ERC again in Q1 2022?
Hi Julie, yes, you have to compare your earnings in 2020 and 2021 to the same quarter in 2019. And although the ERTC was originally extended through Dec 2021, it was later changed to Sept 2021 (only recovery startup businesses that began after Feb 15, 2020 can claim the credit). And there is no ability to claim in 2022 as it was not extended.
Hi Lyn, part 1 of the worksheet is using the originally filed wages listed on line 5 to do the calculation in part 1. You should be able to do this using your original 941. If you didn't claim the ERTC credit on the original return, you would complete the 941-X using the figures you calculate on the worksheet. So look at line 5a column 1 on the originally filed 941 for wages paid prior to July 1 (you don't mention filing a 2nd QTR return, but if you paid non-majority owners in that period, you can qualify then too), or line 5c column 1 for wages paid July 1 or later to calculate the non-refundable portion of the ERTC which is what I'm doing 3:21-3:30.
I SO CONFUSED. WHAT IF I DID NOT FILE THE ORIGINAL 941 FOR THIS QUARTER?? CAN I JUST DO THE SAME TEACHING METHOD YOU SHOWED US IN 2020? THIS IS A HARD TASK.
If you did not file the original return, you claim it on the original 941. You do not use the 941-X and the process is the same to calculate the qualified wages, total ERTC, non-refundable and refundable. But, you put on the 941 form where it lists those specific items.
@@CandyMesser Hey Candy, I did have one more question. What about the REVOVERY START UP? Is that original too or the 941X. The startup has not filed a 940 yet. No one has been able to answer this one. Thanks!
@@gabrielvincent6537 You claim the credit on the 941 if you have not yet filed, You use the 941-X if the credit was not claimed on the original filing and is used to claim the credit. Since you have not filed the original 941 form, you will calculate the ERTC figures and include on the original 941 form. You need to file quickly if going back to 2020 as the period to claim the 2nd quarter credit expires in a few months.
Candy, thanks for the video. One question I'm having a hard time finding guidance on... As a paid preparer, can my client sign electronically on the 941-X (ie docusign)? I know as a preparer I need to sign physically, but I was curious about the client?
I have been signing with my Adobe signature that looks like it's been written, so if they can do the same, I think it's fine. But if it's sent through Adobe and it types the text with the date/time it was signed, I'm not sure the IRS would accept that. We have sent the forms to the client to sign/mail.
Thank you , finally a video that really helps. Question, when using the work sheet 2,... On line 1b do I use the actual wages paid (from 941 line 5a/5c) or the qualified wages NOT covered by PPP. which amount would we use to determine line 1e/1i ? and is this the amount I put on line 30 on the 941X?
You'll use wages reported on the original 941 for section 1 which determines the non-refundable portion of the ERTC. You'll put qualified wages for the quarter on line 30.
@@CandyMesser what is the rationale for using the wages on the orginal 941 instead of the qualified wages to get the nonrefundable credit/employer share of ss tax?
@@CandyMesser also, do I have to decrease wages on 941x Part 3, Line 6 by PPP and owner’s wages or is it only done on Part 3, Line 30 of Qualified Wages?
@@marinela8682 It's the requirement of the IRS. The instructions state to use the Social Security wages originally reported on the 941. The qualified wages are used to determine the ERTC which is the total credit. The non-refundable portion is the employer share of the original SS tax paid (or if claiming in 3rd or 4th QTRS 2021, the employer cost of Medicare).
@@marinela8682 You remove all non-qualified wages from total wages which then becomes the figure you report on line 30. You don't put anything in part 3 line 3 as wages weren't wrong on the original filing. You only put amounts on the 941-X for figures that need to be updated/corrected. Your original wages on the 941 are correct. You are only completing the 941-X to claim ERTC, so you'll fill in lines with adjustments which for ERTC are the refundable, non-refundable, qualified wages (and medical if applicable).
No W2s are necessary. The IRS has access to that information already. You don't even submit the worksheet. Only the 941-X for each quarter you are claiming ERTC.
You must determine how much of your wages (and in what quarter) you are going to apply to PPP. I don't know if you had both loans and when your funding dates were. But as an example, for the 2020 loan, if you had a 24-week period and you were funded in April or May, we have suggested that you apply for ERTC for March 13-June 30, 2020 (if you have any non-qualified wages such as qualified sick and family leave, work opportunity credit, majority owner and related family, etc, that these amounts paid in the PPP covered period can be applied towards forgiveness). Then look at the remaining wages in the covered period needed for PPP. Hopefully, you paid enough to use 3rd QTR through the closing date of the covered period for forgiveness. If so, and you have excess wages remaining, you can then claim ERTC for any employees who hadn't reached the max $10K yet. By doing it this way (looking at wages per employee per period and finding out how to allocate them), you can max ERTC and PPP forgiveness. I used a client's info as an example of what we did. If you haven't already seen it, you can find it at th-cam.com/video/ExVnqFEnOa4/w-d-xo.html It is a bit complicated and if you have trouble determining how to allocate wages to maximize your claim, you can reach out to us for help. 310-534-5577 or contact@abandp.com.
Great videos and a huge timesaver! I talked to so many people on the TurboTax community boards about the ERTC and got sent in all sorts of directions before I learned about the 941-X from your video. I just about finished my 2021 taxes in TurboTax (sched C - sole prop with one W-2 employee) and wanted to ask about filing these Q1 2021 and Q2 2021 941-X forms. I have them filled out and ready to go and plan to send them in shortly after submitting my 2021 taxs. I had a call the other day with the IRS about the ERTC and they mentioned having to make some sort of adjustment to my W-2 employee salary on my sched C to support the 941-X credit? Am I misunderstanding this. Or am I missing a step that I need to do on my 2021 taxes? Or do I just file norrmally and then send in these two 941-X forms for whatever credit I'll get back?
You don't adjust employees' wages on their W2 forms (their wages paid aren't being changed, you are receiving credit against qualified wages you paid), but you will have to amend your 2021 tax return to account for the credit you will be receiving if you file prior to receiving the credit. Or, you can assume your calculations are correct, reduce your expenses by the credit you expect, and file. I have been suggesting that clients review the information with their CPA to make sure the amounts amended or adjusted are correct. If you file your own return, there may be a place in Turbo Tax that asks if you received the ERTC credit and can help you adjust the return by the ERTC amount.
@@CandyMesser Thanks for the response! I meant to post that on my personal TH-cam account not on my company account, ha ha. I talked to the IRS and have the calculations for the 941-x right, they said I need to make the wage adjustment on my schedule C. So if the wages listed currently are $2,650 on line 26 (does not include the $26,000 elective 401(k)) do I just reduce that with the $14,000 and make the total zero? and then file the 941-x forms separate from my 2021 taxes?
@@jonkoerber4723 I am not a tax preparer, so you might want to ask a CPA, but the wages that you report on Schedule C (employer cost) must include all amounts paid (the $26,000 401K isn't subject to the payroll taxes as it's a pre-tax deduction), but as the employer, you incurred the full salary expense. So I assume from your numbers your actual wages were $28,650. If you reduce this by the $14,000 credit you received, you would report $14,650. But again, I don't give specific tax advice since I am not a CPA, you might want to ask a tax preparer just to b sure.
Some are saying in Part 2 check 5c (since taxes were withheld from W2 employees) and not 5d (what you indicated to mark off in the video). Which one do we check if applying 941X for just ERC purposes? Thanks
I have been doing these returns since early 2021 and none of my clients have had issues checking 5d. The reason I say not to check 5c is that you are not claiming credit for taxes withheld from employees. You would check that if there had been a mistake on an employee that reduced the amount owed and part had been owed back to the employee when filing the 941-X. The ERTC is a credit for keeping employees on payroll, so you calculate on the employer share of the Social Security (or Medicare if after 2nd QTR 2021) for the non-refundable portion. There is no adjustment to an employee's wages or taxes, so 5c is not checked.
Dear Teacher Candy, this morning I drank coffee with my old friend who opened a business in February 2021. So, can he claim ERTC with Recovery startup business? Looking forward to hear your advice. Thank you.
@@CandyMesserDear My Teacher Candy, He had S-Corp Company, fill out Tax with 1120-S. This is his 2rd shop started in Feb.2021. Can he still claim ERTC as Recovery Startup Business? He had paid payroll for employees. if he can, he should can Quarter 3, 4-2021. Thank you.
Hi Candy, your video instructions are clear and so helpful! Question: for a recovery start up business (started November 2020 with one employee), can I claim the ERTC for the 1st and 2nd quarters of 2021 even though we were not in business in 2020 except for the last two months? If so, which worksheet do I use for those quarters? I think I'm good on the 3rd and 4th quarters 2021 because your instructions are so clear!
You can only claim the ERTC in 1st and 2nd QTRs of 2021 if you were under a mandatory reduction of services/shutdown since you don't qualify for the income comparison guideline which requires the comparison to 2019. If you did not have a shutdown requirement, you can only claim the recovery startup for quarters 3 and 4. If you do qualify, you can use worksheet 2 from the updated forms in July, or the one released earlier (if you need a worksheet, you can reach out to my staff at contact@abandp.com to have it e-mailed to you.
Thank you for the video @ Candy Messer. For a recovery startup business formed on March 5, 2021, can you recommend an acceptable entry for Part 4, Line 43?
We are a recovery start-up business having begun operations March 5, 2021, and are not otherwise eligible for the ERTC based on a full or partial suspension of business operations or a decline in gross receipts.
In the video, you calculate a Nonrefunable portion of the ERC, attributed to Medicare (and previously Social Security) Wages... so if I am understanding everything correctly, The government is taxing the ERC as well, by Disallowing a certain portion of the claim... is that correct? We've already paid Medicare (or SS) taxes on these wages... so they're basically double dipping here, unless I am missing something.
I don't why they separate it this way and call it non-refundable. But if you paid all your taxes, you will get the full ERTC you calculate. At least the info we've received from clients who have received their refunds. Not only are they getting the full refund, but interest as well.
@@CandyMesser so if we’re filing a claim (we’ve already paid full taxes on wages) we don’t have to calculate the Medicare/Ss withholding amount… and reduce our claim by that amount?
@@jobjones4796 You still must calculate the employer share of the tax (prior to 3rd QTR 2021 it was on Social Security wages. For 3rd QTR 2021, it is Medicare wages). You must still calculate the non-refundable portion and subtract it from the total ERTC you calculate from qualified wages to determine the refundable portion an enter on the 941-X. But as I mentioned before, the clients who are telling us they have received their checks are getting the full amount plus interest. So why the IRS splits this into 2 parts is still not completely clear to me. But follow all the directions on the worksheet to properly calculate all figures.
Thanks Candy - I just want to verify Qtr 1or 2 2021 based on SS Wages - 5A 941 multiply by 6.2% for Line 18A 941x. Line 27 941x is 50% of wages line 30 941x. Qtr 3 2021 wages are based on Line 5C 941 multiply by 1.45% for Line 18A 941x. Line 27 941x is 70% of wages line 30 941x. my head hurts lol
If you only have wages in 5a and not 5b (tips), then yes it is 6.2% of your Social Security wages which is put on line 18a. But for 2021, line 27 is 70% of qualified wages listed on line 30 (2020 was 50%). For QTR 3, it is 1.45% of 5a and 5b. Line 27 is still at 70% of qualified wages.
Candy, your videos are so helpful! I own my company so I don't believe I can include my wages in my calculations. I have run some reports in my payroll system and crunched a few numbers. What specifically do I delete from my previously filed 941s to make sure I am not claiming any of my own wages or taxes in my calculations? Just my wages?
You don't adjust the requested number from the 941, but you do adjust the qualified wages subject to the ERTC credit. For instance, section 1 of the worksheet asks you for Social Security Wages to determine the non-refundable portion (2020 through 2nd QTR 2021) and Medicare Wages (3rd QTR 2021). This number is not adjusted on the worksheet. But when you are determining qualified wages, you would remove your wages.
@@sharonpowell4438 The IRS allows 941-X forms to be filed up to 3 years after the original filing date. But I don't suggest waiting. I'd file now. It's taking the IRS 7-8 months to process forms and we're headed into tax season where more mailed documents will be received and slow down the processing time even more.
Hi Candy, are businesses still receiving Q4 2021 credit? Or only recovery start ups? Also, when calculating the full ertc credit amount, do you use the refundable portion of retention credit (line 26), or the total amount (line 27)on the 941x's? Thank you for your help!
Only recovery startup businesses can claim ERTC for 4th QTR 2021. And you calculate refundable and non-refundable portions of ERTC and both are listed on the 941-X. Non-refundable is listed on line 18(a) the refundable portion goes on line 26(a). You then add these together to get the total on line 27.
@@CandyMesser What does non refundable portion mean ? I understood that is the employer's share of SS tax but it doesn't make sense to me when it is called non refundable. Thank you so much for your clarification.
@@Hannah-hc6pn I don't know why they used the word non-refundable when you do get it back except for the fact that it was the portion of the tax you were required to pay as the employer on the wages reported on the 941. What will happen is that when you get the refund, the notice splits it into 2 parts. The non-refundable is shown as a reduction of the tax due and the refundable portion is shown as a credit.
Hi Candy, Thank you for this very helpful video! Do you know if after filing Q3 2021 941-x for ERC, will employers need to make an adjustment on W-2 forms for 2021?
Hi Candy, could u make video about accounting and reporting toward ERTC which employers received for 2020 in the year 2021. Thank you for your support!
@@CandyMesser yes that is what I mean. Because I submitted 941X in 2021 (for 2020) when the FS and 990 was closed (6-30-2021). In addition, I did not do any entries because I was not sure if IRS approves ERC under partial shutdown. Thanks for your time.
@@hoanganhdo9770 What I would do is create an "other income" account called ERTC credits received (or similar), and post the deposit when it was received (in 2021) since your books are closed for 2020. BUT, the CPA would have to do an amended tax return for 2020. If they want the credits to be in 2020, you can do an adjusting journal entry and they can give you the steps to enter that info. Otherwise, leave the deposits as is in 2021 and they can amend 2020 with the credits received last year and exclude that amount for 2021's tax return even though it's on the 2021 books since they will have accounted for it already. I hope this makes sense.
@@CandyMesser Thank you so much for your response. As far as I research for NFP (we are 501C3) toward ERTC: The followings are my considerations, please kindly let me know if I understand correctly or not?: (1) IRS has not clear guideline for exempt-organizations like us: Whether a tax-exempt organizations must file an amended return if the ERC wages are not associated with a UBI activity. (2) Regarding accounting and reposting: We must apply only ASU 958-605-25 Revenue recognition and 958-310-50 disclosure because we are not-for profit. Under these rules above, I understand that (3) FS ended 6-30-2021: I should restate the FS by adding Government Grant for each month of 2020 because it was conditional contribution and the conditions were met by each month (partial suspension) under 958-605-25. Also, the disclosure should be added as well. As a result, (4) The 990 should be amended as well because FS was changed due to restate. Ironically, IRS did not have guideline for non-exempt toward restate FS and amended 990.
Thank you so much for sharing your knowledge and time. I am filing a 941x for Q3 2021, I am choosing adjustment in part 1 rather than credit so I can have it applied to my Q1 eftps pymts. Do I check "4c" in Part 2? Also, as I understand it, If this is sent in today Q1 2022, the adjustment will apply to tax pymts due in Q1 2022. What happens if the ERC amount due to me is higher than my tax liability for Q1 2022? How do I get the difference sent to me or have it applied to Q2 2022?
Yes, you check 4c if selecting an adjustment. And if the credit is greater than your liability, you can continue to apply to the 2nd QTR 2022 until the credit has been used completely.
Candy, sorry again! I though you could only deduct the employer half of Medicare, you have deducted both haves ( half on line 18a and the other half on line 26). Is this right? The worksheet does not say to carry the total on line 1g to line 18a but clearly says to carry line 2i of the worksheet to line 26 on 941X. Again is this right or should we only be deducting the employers half? Thanks!
Like in the example I just shared, it isn't half of the employer tax on 18 and the rest on 26. The employer paid Medicare tax is used to determine the non-refundable portion of the ERTC. You then take this and subtract it from the amount you calculate for ERTC to get the refundable portion of the ERTC. I don't know why the IRS calls it non-refundable as you get the full ERTC, but this is what you must do to properly complete the worksheet and 941-X.
Hi Candy - I have a question. For form 941x Q2 if you also have wages from Q1 you can add them on Q2 2020. Now on the worksheet in Step 1a when it asks to enter the amount of social security wages are we entering Q2 only or Q1 and Q2 wages combined? Thanks!
You only use the amount that was originally reported on the 2nd QTR 2020 941 form. This is to calculate the employer share of the Social Security tax which becomes the non-refundable portion of the ERTC. (Not sure why it's called non-refundable because you qualify for the full credit).
Hi Amber, I'm a little confused on your question. 43 asks for an explanation of why you are filing for the credit. You would explain the details for any period in which you are claiming (you can use the updated July 2021 form to claim 2020 or 1st/2nd QTRS 2021 credits as well). You will enter the period on the first page as well as the top of every subsequent page. So your comments should be for that specific quarter. For instance, if you are filing in 3rd QTR 2021 and the reason is due to at least a 20% reduction of income compared to the same quarter in 2019, that is what you would say. If you are filing as a recovery startup business, that is the explanation you'd use. I hope this answers your question. If not, please let me know.
I see what you mean now. Even though I said 2019, I typed 2021. I guess that is what happens when trying to reach and complete the form at the same time. OOPS! It should have said there was a reduction in 2021 compared to the same quarter in 2019. I'm so sorry about the confusion I caused with that error!
@@beverleykatic3991 So sorry for that mistake, I was typing and talking at the same time. I said the correct year but typed the wrong one. So sorry for the confusion!
Hello, very helpful videos. I've been working with a revenue officer since January 2021 because they're asking me to pay the taxes due for the quarters I applied for the ERTC which I didn't pay. I gave the officer the 941X and he's filed for me and even put expedite. To this day the system shows the return was accepted but still no movement after 1 year. On part 1 of the 941X I checked box 2 because the amount I'm due is more than the taxes owed. My question is if I file another 941X today and check box 1 on part 1 to just have the money applied to any taxes due, does this make the process faster so they take my account out of collection? and will the adjustment only cover taxes due for the quarter I filed for and I will not receive the extra money towards future taxes? Thanks in advance
Your situation is a bit difficult and I don't necessarily know the best answer since I'm not an agent. But what I know in general from other scenarios I've seen in the past (not related to ERTC claims) is that if you have a credit due from one period, but tax owed in another, (or income tax refudn but outstanding payroll tax) the IRS will not send the full refund and then have you pay the tax for the outstanding balance. They apply the credit to the tax owed. So I don't believe that filing another will help for a couple of reasons. The first is that the IRS is taking up to 1 year to process the forms (most clients who let me know they got the refund had it closer to 6-8 months, but one client waited a year for their refund for 3 quarters). The paperwork will be sitting in the pile of documents for months and not help you get the refund any quicker. Secondly, by the time they do process it, they most likely will have sent the refund after applying the amount to the tax due). I think the revenue officer marking it to expedite was the best option for you. Keep in mind that him expediting it could just mean rather than 6-12 months, it will still take a few months for them to process, apply the credit to the unpaid tax and send a refund for the difference. But once they finally apply the credit to the tax balance, you should receive the difference back. You may want to contact a tax advocate (this is separate from the revenue officer) for assistance to get it resolved. I'm sorry you are dealing with this for such a long time! But they shouldn't have you in collections if you are indeed owed the ERTC credits which should be applied to your balances. Find information on the tax advocate here: www.irs.gov/advocate/the-taxpayer-advocate-service-is-your-voice-at-the-irs I wish you good luck getting a resolution!
Hi Candy, is the change for 2021 Q3 simply with regard to the refundable vs. nonrefundable breakout (due to FICA vs Medicare employer tax), but does not impact the potential total credit? OR...does the change for 2021 Q3 actually impact the qualified wages that can be used to calculate the credit itself, thereby increasing potential credit by increasing qualified wages from FICA wages to Medicare wages? Thanks!
The change is only in regard to the calculation of refundable/non-refundable amounts of the credit. You can use up to $10,000 in qualified wages per employee per quarter in 2021, and it's the same whether 1st, 2nd, or 3rd quarter.
Thank you! Would you use Medicare wages for all 3 quarters (up to $10,000 per employee), as that would include additional items like employee 401k contributions and health plan costs, which count towards 'qualified wages' ?
Hi Candy. Are refunds issued solely by filing the 941x? It's been several months since I filed them and we haven't heard anything, so I'm wondering if I missed something. Thank you for all the wonderful info you provide!
Yes, you only file the 941-X. But if it's only been several months (I'm thinking you mean 3 or 4), you will have a few more to wait most likely. Clients who have started to receive their refunds had to wait 8 months. And keep in mind if there was a reason you would not be given the refund, the IRS would send you a written notice saying so.
@@CandyMesser Since refunds are taking so long, Instead of requesting a refund for Q3 2021 ERC, can I choose not to make eftps tax pymts for Q4 2021 and Q1 2022 totaling the amounts owed to me? If so, how do I reflect this choice?
@@Amel_Vis you would need to file the 941-X this quarter and choose adjustment in part 1 rather than credit. Also put in the notes you'd like to apply the credit to 4th quarter 2021 liability. The adjustment is posted to the period the 941-X is filed, so if it's postmarked in January and you don't pay 4th quarter tax, you'll be charged a penalty and interest for the amount due.
You don't subtract it on the form you are filing (941-X). You look at the wages in the quarter and subtract from there to determine qualified wages. What I recommend when calculating wages is to first see if you filed for the 8 weeks or 24 weeks for the covered period. Determine what amount of wages you used in total during that period for forgiveness (remember that payroll costs also include state employer-paid taxes, 401K match, Worker's compensation premiums, healthcare premiums, etc) Once you know your non-wage payroll costs, you know the amount of wages you need for forgiveness. Then look at the wages for your employees and see if anyone is not allowed for ERTC (majority owners/related individuals). Who has wages over the $10,000 max - excess wages go towards PPP. If you still need wages to cover, see how much and take away from employee's wages for ERTC until you have full forgiveness. The remaining amount in the quarter can be used for the ERTC calculation.
Hi Candy, thank you for the video. How do you determine the qualified wages 2a (total gross wages including OT and sick time?) and qualified health plan 2b expenses for worksheet 4 if my 941 doesn't have anything on line 21 - 22 as we did not claim the ERC before. Also, if filing for quarters prior to 07/2021, do I use this July 2021 version of 941X with the worksheet 2? Thank you.
Joanna, to determine qualified wages, you must look at the payroll for everyone paid in the quarter. Remove any majority owners and related individuals (if any), and also determine which wages were used toward PPP forgiveness (if applicable). Once you have what remains, remove any wages that have received other credits (paid sick/family leave, opportunity zones) if applicable. Then, you reduce the qualified wages to $10,000 max per quarter in 2021 or year in 2022. Qualified health plan expenses are the employer share only. You can still use the 941-X from July 2021, but you must use the former worksheet to properly calculate the non-refundable portion.
@@cassandrabrookerosas5222 I don't have enough info to answer this. Are all 4 owners equal ) or at least each owns less than 50%?) If no one owns more than 50%, there is no majority owner, so all wages can remain. If one owns at least 50.01%, then none of the related individuals can be included.
Hi, I have a quick question; In this video you checked mark Item 3 on Part 2, but in the original video it was not selected. Also, in the last page (Part 4) you had checked mark number 42 in original video but not in this one. Could you please clarify? Will these selections make a difference as far the IRS approving the credit? Looking forward to hear from you. Thank you so much for your time and great content.
Yes, when I made the first one, I was assuming since the credit did not affect W2s, we didn't need to check the box in section 3 since no amended W2s had to be submitted. But since it says we have filed or will file, I started to check it. Since the W2s aren't being updated, I don't think it would affect the credit you should receive if you didn't check it.
Candy, if I have to claim ertc for 2,3,4 quarters for 2020, do I have to do separate 941x for each quarter. I have seen some say that you can just put it on 4Q 2020 941x so in essence only one 941x for the year 2020? Thank you!
You must file each quarter separately. You will be asked the Social Security wages for the period and you will determine the non-refundable portion of the credit from that amount. Your qualified wages for the quarter will determine total ERTC, and the difference between ERTC and non-refundable portion is the refundable portion.
If the owner of the business is included in medicare wages should i subtract his earnings first for the quarter then put of line 1b of the worksheet? also would it be ok if i used the latest 2022 941 x form for 2021 qtr 1,2,3 is that ok? or must i use the 941 x 2021 form? thank you so much your so sweet and awesome
No, for the non-refundable calculation, you use the figure originally reported on line 5 of the 941. You remove non-qualified wages to determine what goes on line 30. And yes, you can use the newest 941-X form.
appears this ERTC ended 1/31.. .probably a good thing.. got so sick of the pressure of it, my head was about to explode of course the self employed covid sick credit is still available . dont know if you ever did a vid on that one from 7202
Hi Boris, yes there were a lot of ERTC mills aggressively targeting businesses to claim the credit. Many reached out to clients I'd already helped saying they could get $32,000 per employee and then they'd ask me why our calculations didn't add up to that much. We had to explain max wages, PPP, not everyone made $10K in the year (2020) or quarter (2021). I know I did videos and wrote blogs on CA supplemental sick pay and FFCRA. But it's been a while, so I don't remember all the details.
@@CandyMesser "ERTC mills" haha haha.. i love ur verbage girl.... i had some heavy clients tell me "my buddys firm is getting 1 million ERTC refund":.... i said back , do you want to share a striped suit with ur friend?
I did not record another video for the 1st QTR 2021, but it's the same method to calculate the figures as I did in my original video for 2020 except you use 70% of the qualified wages to determine the ERTC. The link to that video is th-cam.com/video/mUrnakfeNvc/w-d-xo.html
Dear Teacher Candy, Hi Good morning! My friend business is not decrease in revenue in 2020, but base on Government order shutdown and distancing. We claim for ERTC, so how many Quarters will we claim in 2020? Looking forward to receive your response. Thank you. Have a nice day!
You can claim for the dates under a mandatory reduction of services (for a section of the business that was at least 10% of total revenue), or full-shutdown. I can't say how many quarters can be claimed because I don't know your location/circumstances. Each jurisdiction made its own rules. But let's say they were under a mandatory shutdown from the end of March 2020 until November 15, 2020. You can claim the full quarters for 2nd and 3rd 2020 (including wages paid March 13-31) and Oct 1 through November 15 for 4th QTR. Basically, you can claim for the period you were impacted by the closure. If the mandate was lifted mid-quarter, you can only claim the dates the order was in effect.
Dear Teacher Candy, thanks for your instructions. According in this situation, if Quarter 4 decease 37% of Quarter 4-2019.So, Can I claim ERTC for this Quarter 4? Thank you.
@@dungchi5688 No, you may not claim it for 4th quarter 2020 as you must have a 50% or greater reduction in 2020 compared to 2019. However, with the rule change for 2021, you can use a prior quarter to determine if you qualify for a quarter in 2021. The reduction required for 2021 is 20% rather than 50%. So using the rule you can use a prior quarter to claim ERTC in 2021, you can claim 1st QTR 2021 stating you are using the prior quarter's reduction of more than 20% to claim the reduction of income qualification for 1st QTR 2021.
Hi Candy, Thank you so much for your life saving videos. I really appreciate your time and afford to help small businesses to get as much as money they can without paying lots of money to others. I have one question and hoping you have the answer. Our business was lucky and got the Restaurant Revitalization Fund last year but I am not sure if that will be consider like PPP and if payroll and other expenses paid with that fund can't be included in ERTC. I really appreciate if you can answer to see if we can apply or not.
Hi Minoo, expenses other than payroll or employer-paid healthcare are not included for ERTC. Also, I don't know if you saw the video I did about how to track the RRF funds. If not, the link is th-cam.com/video/VfR7QcRzjJc/w-d-xo.html
Hey Candy. If my business first opened on January 30, 2021 would I be able to apply for ERTC Credits in 2021 for Q1, Q2, Q3, and Q4 even though I don't have gross receipts in 2020 since my business wasn't created yet? Some context for you is that I was a business with a partial shutdown which would make me eligible for Q1 2021 and Q2 2021. For Q3 and Q4 it seems that I would qualify as a Recovery Startup business. Thanks for all your knowledge!
Yes, it sounds like you qualify for ERTC for 1st and 2nd QTRs based on the shutdown. Because you began after Feb 15, 2020, you fall into the recovery startup business for QTSs 3 and 4.
Hi Candy - your videos are a fantastic resource! Do you happen to have any examples of what adjustments look like if qualified sick leave wages were claimed and the ERTC wasn't? Just want to be certain we aren't overthinking the process.
I'm not sure I understand the question. Do you mean you had already claimed sick wages and now you want to claim ERTC? If so, you must remove any wages for the qualified sick and family leave from the qualified ERTC wages if you received federal credits (if regular sick pay and no federal tax credit, they do not have to be removed). So if an employee earned $10,000 or less in 2020 or per quarter in 2021 and they had qualified sick/family leave, you would reduce their qualified wages for ERTC by the amount of the sick/family leave wages. But, if they were paid more than the $10,000 and if the sick wages don't reduce the regular wages less than the $10,000 max for the year or quarter depending on the year, you can claim the max for ERTC. If this is not what you meant, let me know and I can answer your question.
Hi Candy. Thank you for putting these videos together. They're very helpful. I need clarification on item 2b under Step 2 of Worksheet 4, "qualified health plan expenses allocable to qualified wages for employee retention credit". We pay 75% of our employee's health premiums and also have a Section 125 Cafeteria Plan that reduces the employee's taxable income by their portion of premium. Would this scenario allow me to enter the employer portion of our medical expense amount on line 2b? (my 941 part 3 line 22 is blank) Thank you!
Yes, you can claim this expense as long as you didn't claim it toward PPP forgiveness. Anything used for PPP can't be used for ERTC. But if you did not use for PPP, you may claim it on ERTC.
@@CandyMesser ok thanks. There’s been so many changes and rearranges that i just wanted to double check to make sure my research and understanding was correct. As always Thank u!
@@CandyMesser yes im glad as well, but sad I waisted time doing the 941x for that quarter lol. Oh well, I’ll hold on to it in case there’s a change in our favor.
Hi Miss Candy , Thank you for the video . One quick question . Any video of how to do the 941 for national sick leave benefit . Is there a different criteria for setting up the sick leave pay tab in quickbooks (for quarter 3,2021) the worksheet is calculated differently ?
If you were paying sick leave that qualified for the credit, I would have set up a different pay item to be able to track it since it's different than the general "sick" pay. For instance, we set up for our clients one called EPSL for the sick leave paid to the employee for their leave that was needed, or EPFL for pay to care for a family member. This allowed us to know the wages that qualified for credits by looking at a payroll summary. If you did not originally claim it on the quarter's 941 (we claimed in the quarter on the original filing), then you would complete the 941-X to claim the credit. I did not intend to create a video on this credit. The worksheet will walk you through how to do so, but if you need assistance, I do offer consultations and can help you understand the process to claim the credit.
Hi candy I have 2 businesses one was shutdown my trucking company I receive a ppp loan in 12/2021 I’m trying to file my original 941 but my cpa use my ssn since it’s a llc on my personal taxes instead of my businesses EINs where I find the wages or begin to start to receive the ERC tax credit on both of my businesses it’s kind of hard for me to follow along I’ve watched 3 of your videos and do not know where to begin with this process requested ppp loan was 13,245.00 amount spent on payroll $8,602.75 covered period was from 4/16/21-06/18/21 so how do I apply and what year should I print out for the 941
I'm a little confused about how your CPA could use a SSN instead of an EIN. When running payroll, SSNs aren't allowed and you must enroll for an EIN. I assume you are referring to payroll for other staff, not yourself, correct? Another thing you have to keep in mind is that with 2 businesses, if they are under the exact same ownership, they have to be combined to determine qualified wages, etc, especially if one or more employees worked in both. You might benefit from a consultation with my employee as your situation doesn't sound straightforward. If interested, you can contact my company to start the process. Consultations are $250.
In my calculation for the credit, do I take out the 6.2% for social security wages and 1.5% for the medicare wages, then base my 50 or 70% off that reduction? Thanks so much for this tutorial!
No, the 6.2% and 1.45% calculations are only to determine the "non-refundable" portion of the credit, but you still get this amount of the credit as long as all taxes were paid. Your qualified wages are used to determine the total ERTC. What is removed from gross wages to determine qualified includes majority owners and related individuals, amounts used for PPP forgiveness, amounts used for qualified sick/family leave or any other federal credits such as the work opportunity credit, and amounts over the $10,000 limit. Subtract the non-refundable portion from the full ERTC to find your refundable portion (or if total ERTC is less than the non-refundable portion, the refundable amount is zero).
Great video! Really good instructions. But I’m still a bit confused. Line 18a on 941X is asking for NON-refundable credit. So since that amount is deducted on the worksheet and would would’ve been on the 941 , line 11c, why is it being added to the refund amount on the 941x ? Why isn’t the $630.16 being deducted from your refund since its a nonrefundable credt. How can you get credit for line18a when it clearly states that it’s non refundable? Thx!
The IRS calls it non-refundable, but you do get the full ERTC credit you calculate which is split into non-refundable and refundable. I don't know why they use that wording. But the non-refundable portion is the amount of your original employer tax liability on the 941. When you get your refund, the IRS will call this part a reduction of tax liability. The refundable portion will be specified as a credit. But you do get the non-refundable portion as well in your refund.
I also just released another podcast episode specifically dealing with questions on the ERTC. You can watch that episode at th-cam.com/video/f-1flFx6g3E/w-d-xo.html or listen on multiple podcast platforms.
@@CandyMesser thank you immensely for taking your valuable time to respond to me! Yes that language (ie NONrefundable) definitely had me thoroughly convinced that line 18a should be deducted from the refund or else the IRS would deny our refunds for that over calculation of the refund payment. I racked my brain for 3.5 hours trying to “fix” line 18a because the program i am using kept on calculating line 18a into our total refund amount no matter what i did to try to have it to deduct it. I even sent the software company an email last night laminating how they need to fix the glitch in line 18a because it should be deducting and not adding the “non refundable” credit. Now (if they respond) they are gonna think I’m crazy lol. I even decided not use the program and do it manually so I could manually deduct line 18a from our refund. Thanks for saving our $4100 that i was absolutely sure needed to be deducted from the refund. Again thank you so much for thoroughly explaining this because it was the only hold up with me completing our returns. Also, i about to subscribe to your channel and check out the other video you shared. Gosh Thank u, Thank u, Thank u☺️!
@@kteam4u You are welcome! I wasn't aware there was software out there to do the work. We've been doing all the filings for clients manually. 🙂And yes, please subscribe. Thank you!
If you mean to calculate the non-refundable portion of the ERTC on the worksheet, you use the wages originally reported on the 941. If an owner is included in that aount, then yes. You must use the wages reported on line 5 of the 941 for the quarter in section 1. However, if wages of a majority owner and/or related individuals are included in the figure on line 5, you would remove that amount to determine qualified wages for ERTC.
Good afternoon, thanks for the video, I have a question, if I did not know about the credit and I presented and made the payments of the 941 for the first, second and third quarters of 2021, can I present a 941x for each quarter of 2021 and receive a refund for those quarters filed?
Dear Candy, Can I claim ERC for Quarter 4 in 2019? Thanks so much for your helpful video. If I had received PPP Loan in this Quarter. And How can I calculate for this Quarter? Can you show me? God bless you!!!
@@CandyMesser Hi Candy, Can You show me how to claim ERC with PPP fund ? And If any quart has PPP, I will not claim anymore. How to calculate? Thank you.
@@dungchi5688 I created a how-to video to show one example of a client we did for their PPP and ERTC. See if this helps. th-cam.com/video/ExVnqFEnOa4/w-d-xo.html If you still need assistance, you can e-mail my office at contact@abandp.com. But because it is a bit time-consuming and every case is different, we do charge a fee to do this work. We can give you the fee once we know how many were on payroll during the 2nd/3rd/4th QTRs 2020 (or 2021 if you claimed in that year).
If you are filing for Q3 2021 ERC only and using the 941x form, and you have "Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021" on your original Q3 941, line 11d, do you have to complete Worksheet 3. "Adjusted Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021"? Or is Worksheet 3. only if you are making corrections to the Qualified Sick and Family Leave credit??
The worksheet is only to determine credits to claim. For instance, if someone qualified for it but failed to claim it originally on the 941, they would use it to claim the credit. If you are filing for the ERTC, you must reduce qualified wages by the amount of the wages you used to claim the credit for the sick and family leave.
For wages that are paid in October, 2021 for payroll periods that ended September 30, 2021, would those go on the 4th quarter 941 even though the business is not a start-up. In other words, can a non start up claim these wages in an otherwise ineligible quarter because they were earned in a qualifying quarter?
No, payroll is based on date paid, not earned. So just like wages earned the end of 2nd quarter were included in the 3rd quarter, end of 1st included in 2nd, etc, you can only claim wages paid in the quarter for that quarter's ERTC. If you are not a recovery startup business, you can't claim 4th quarter 2021.
When calculating qualified wages, do you use net pay? If so, my employees make tips. I seen those are qualified, how do I include tips in qualified wages?
Candy thank you for the video. I own 3 companies. Can you discuss how the Aggregated group process is determined? From my understanding If one of entities was fully or partially suspended they all qualify.
Hi Chad, I don't know your situation enough to say how this would apply to you. But just because you own 3 companies doesn't mean they would be aggregated. According to the FAQs regarding aggregation: Under the section 52 rules, corporate taxpayers may be required to aggregate as a parent-subsidiary controlled group, a brother-sister controlled group, or a combined group of corporations. Section 52(a) of the Code describes a parent-subsidiary controlled group of corporations, generally, as one or more chains of corporations where the common parent corporation owns more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the value of all classes of stock of each corporation. A brother-sister controlled group of corporations, generally, is two or more corporations where: (1) five or fewer persons who are individuals, estates, or trusts own at least 80 percent of the total combined voting power of all classes of stock entitled to vote, or the total value of shares of all classes of stock of each corporation; and (2) the same five or fewer persons, taking into account ownership only to the extent that it is identical with respect to each corporation, own more than 50 percent of the total voting power of all classes of stock entitled to vote, or total value of shares of all classes of stock of each corporation. A combined group of corporations is three or more corporations, each of which is a member of either a parent-subsidiary or a brother-sister controlled group, and at least one of which is both the common parent of a parent-subsidiary controlled group and also a member of a brother-sister controlled group. The section 52(b) aggregation rules apply to partnerships, trusts, estates, or sole proprietorships in trades or businesses under common control. Under this rule, entities are considered a single employer if they are under common control applying rules similar to the parent-subsidiary or brother-sister controlled group rules or the rules for a combined group of corporations. Under section 414(m) of the Code, an "affiliated service group" is treated as a single employer based on rules related to the performance of services by one entity for another or by one entity in association with another for third parties, even if the entity does not have sufficient ownership or control of the other entity to form a controlled group. Members of an affiliated service group under section 414(m) of the Code, or otherwise aggregated under section 414(o) of the Code are considered a single employer for purposes of the application of the Employee Retention Credit rules. As a result, these employers must be aggregated for purposes of the following rules applicable to the Employee Retention Credit: 1. Determining whether the employer has a trade or business operation that was fully or partially suspended due to orders related to COVID-19 from an appropriate governmental authority. 2. Determining whether the employer has a significant decline in gross receipts. 3. Determining whether the employer has more than 100 full-time employees. If applicable to you, the amount of the Employee Retention Credit must be apportioned among members of the aggregated group on the basis of each member's proportionate share of the qualified wages giving rise to the credit. That was a lot of info. In summary, if under the ownership rules, you must aggregate, then, yes, all can be considered affected by the government mandate and you would have to determine the amount each qualifies for. I have not had a case where I have had to do this for a client.
Thank you for all the great info! I have one ques. If filing the initial Q3 return, Do I file the 941x as my ORIGINAL return even though I have not submitted the 941 for Q3? I'm confused because it would technically not be "correcting" a return as the 941 has not been filed.
No, you can't file a 941-X as an original filing. It's always correcting a return already filed. If you are claiming it for 3rd QTR 2021, you should have your payroll company include it on the 3rd QTR 941 (although it may already be filed). If already filed, you will then have to do a 941-X to claim it. If you do your own payroll and file your returns, you add the information on the 941 to claim the ERTC credit for the quarter.
If there are mistakes, the IRS will send it back to you to correct. It's better to confirm now than wait for a notice, submit again and then wait the 6-8 months of processing time to get the refund. We do offer a review if you want a professional to check your information. You can reach out to us at contact@abandp.com, let us know how many quarters you need to file and want reviewed, and we can give you the fee.
1)How did you get the qualified wage amount? All of my employees made under 10000 for the year for 2020 and 2021. 2) How do you calculate the portion for march of 2020?
Each case we do is different. But we had to know if the client had a PPP loan. If so, what was the covered period? Then, we have to determine what wages were needed for PPP and how could that be spread over quarters in the covered period to maximize ERTC and PPP forgiveness. If no PPP, we started with 2nd QTR (anyone who qualified generally qualified at least for 2nd QTR 2020). We'd look at gross wages for each employee and make sure no credits for qualified sick pay were included. If they didn't have $10,000 gross in the quarter, we pulled wages for March 13-31 and added to 2nd QTR for the ERTC claim. If they still didn't meet the $10,000 per employee and they qualified in another quarter, we'd use the wages in that period. If they still didn't have $10,000 for the year and qualified in 4th QTR, we'd file that return as well. 2021 is a bit easier since it's $10,000 max per quarter, not year.
Thank you again for your help and posting this video. One question, two parts - In part 4, I notice that you did not check box 41 or box 42. Should these be left blank per the video? If not, which box should be checked for the ERC?
My video has the 941-X that only goes up to line 37, so I assume you are looking at the newly released 941-X from July 2021, and your question about lines 41 or 42 is if you have under-reported and over-reported amounts on the same form, and reclassifying workers. If you are only claiming the ERTC, these do not apply.
Hello, These videos have been helpful but I have a question. I just found out about this credit and am trying to go back and file for 2Q 2020 - 3Q 202, for 2020 should I do a 941-x for each quarter separately ? Thank you
thanks so much for uploading this video, I have question would like to ask, if the company have two partners owe 50% for each and the wage for these 2 owner can use for wage to apply ERTC?? I know majority owe more than 50% wage can not be used for ERTC but I am confusing for majority own 50%, Appreciate for your reply
According to the information I saw from the IRS, it specifies a majority owner which would be greater than 50% ownership. If you and your partner each own 50%, that is not majority ownership and the wages should qualify. However, it must have been paid through payroll (therefore some type of entity), not a partnership with draws paid to each partner.
@@CandyMesser You are a lifesaver! Thank you for all these Q&As and the videos! Regarding your response above, our LLC has at least 4 owners with only one above 10% ownership that were paid thru payroll to cover health deductions but no taxes as they each receive K1s. Because of this, I'm assuming we would NOT include their wages unless our payroll servicer included the their wages on the reported 941. Correct, or no?
@@cathyhull4861 If they had wages on the 941 and are not majority owners, they can be included. If they were not on the 941, they can not be included. If the payroll is only to reflect healthcare paid by the company for them and is not truly wages, it would not be included. For instance, if the LLC is taxed as an S-Corp and the owners' W2s show payments under the 2% or greater shareholder healthcare received, these amounts are not wages. But the company can claim this portion under the employer-paid healthcare expense on the 941-X.
The other issue I have is putting the Mar 13-31 2020 on 2Q 941x, Don't know where to add the social security for that time. All second Q don't qualify due to PPP
You don't include the Social Security wages for March on the 2nd QTR return. You only put the amount from the originally filed 2nd QTR 2020 941. Even if you can only claim March wages for ERTC, you will use the original 2nd QTR Social Security wages since the March credit is claimed on the 2nd QTR 941-X.
@@CandyMesser Ok, I don't have anything ertc available for second Q but do for Mar 13-31. I thought that I would put that amount in Pt 3 line 33a (941X) to add that amount for a credit. but that I cannot find where to put the SS portion . Are you saying you can get credit for the wages but not for the social security on those wages?
@@janetdwyer2781 You don't get credit for Social Security, only qualified wages. You use the Social Security wages from the original 941 for the quarter to determine the non-refundable portion of the ERTC. Take the total ERTC less the non-refundable portion to get the refundable portion. But I assume since you only have wages for March that the non-refundable will be greater than the ERTC which means your total refundable is zero. I'm not sure why the IRS calls it "non-refundable" as you still can claim the credit. Also, why do you not have wages for 2nd QTR? Did you use an 8-week covered period for PPP and not use the 40% non-payroll expenses toward forgiveness? If so, that would make sense. But if you used a 24-week covered period, you should be able to claim wages in the 2nd QTR for ERTC by spreading the wages needed through different quarters for PPP. Many of my clients didn't claim any PPP wages until the 3rd QTR allowing them to claim ERTC in the 2nd QTR.
Hi there, I've watched your videos which have been very helpful, and have a formatting error question for you. I mailed out my 941-Xs today but after the fact I realized I did not input the numbers to the right of the decimal in the second column for each line item; I entered the whole and decimal amount to the left but of course included the decimal (I copy and pasted from excel). Should I be concerned the IRS will reject based on formatting?
I think it will be fine. If for some reason a computer is trying to read it and can't, hopefully, a human will process it for you. But I don't know for sure. This is something they don't give an answer for.
You can use the revised 941-X for 1st and 2nd QTRS, but it was revised in July 2021 due to the update to how to calculate the ERTC as of July 1, 2021. So you can use either as long as you can properly account for all line items needed to claim the credit.
Oh dear, I am sure Inreading a recent IRS FAQ that there is an alternate quarter election allowed - eg if one quarter qualified for ERTC (say q2 2021) but the next quarter did not, say Q3…that a business could use the preceding alternate quarters outcomes as a qualifier. In this example, we would use the q2 outcome to qualify for q3. I think this was called the alternate quarter qualification…did I get that wrong?
You may not use prior quarters to determine eligibility for the next quarter in 2020. However, the IRS did say for 2021 that you could use the current quarter in which you want to file, or the prior quarter to see if you qualify for ERTC (you wouldn't have known if you would qualify until the end of the quarter, but you would have been paying payroll taxes rather than reducing them by the expected credit.) So for 1st quarter 2021, you could look back to the 4th of 2020 and compare to the 4th quarter of 2019 to see if you qualify. 2nd quarter can look back at the first, and so on.
Thank you so much for this video! QUESTION: Worksheet 4 - Line 2h states enter the smaller 2d or 2g - well if 2d is the smaller then 2h is the same and the the refundable portion is ZERO line 2i. Is that Correct?
Yes, you can have a zero refundable portion of the credit. That doesn't mean, however, that you don't get the ERTC. It's just that the IRS splits "refundable" and "non-refundable" for the calculation. You will still have the calculated ERTC to claim.
Yes. The main thing is you can't use the same wages for both ERTC and PPP. But if wages used for PPP began with Feb 2021, you can use January for ERTC (as long as they are qualified - no majority owner or related individuals on payroll, no other credits received such as opportunity zones or paid family/sick leave).
Hi Candy I am a recovery startup. I began paying wages July 13, 202. I do my own payroll in house with Wave. When do i file my 941 if I am seeking an advance. I was told I didn't file the 941 first if i was asking for an advance
941 returns are always due month after quarter-end. I'm not sure why you were told not to file that on time. If you mean the 941-X, you can claim the 3rd quarter on the 941 if you haven't already filed. If you meant to ask when to file the 941-X and not the 941, you can file that now too. I'm not sure what you mean by advance. I think you may still mean the ERTC. If not, please give me more information so I can answer the question for you.
Candy, once a 941x is submitted for the ERC, can you change an error, and if so how would I make this correction> I used line 18c when it should have been 18a?
Hi Beverley, what you will do is fill out another 941-X. Fill in the first part of page 1 with your info, the quarter, year, etc, and be sure to put the info on the top of every page as well. You will only fill in lines 18a and 18c for calculations. You will put the correct amount on line 18a column 1. Zero in column 2. The correct amount in column 3, then the correct amount as a negative number in column 4. On line 18a, you will put Zero in column 1, the amount you put in column 2, the amount in column 2 as a negative in column 3 and positive in column 4. Your numbers in column 4 should be the same except that one is positive and one is negative. On lines 23 and 27, put zero. In the explanation, state that you entered the non-refundable portion of the ERTC on the wrong line, and you are submitting the 941-X to correct it. Be sure to sign in section 5.
Hi Candy: Thank you VERY much for this video (and the older one about earlier quarters). This is very helpful about the 941X. One quick question: how does form 7200 come into the picture? Do we need to submit 7200 for each quarter, along with the 941X? Thank you again for sharing your expertise so generously.
No, you only used form 7200 if you were claiming credits for that quarter in that quarter and had more credit available than you were using for taxes due. If you are filing for prior quarters, you only need to mail in the 941-X forms for each quarter in which you qualify.
Thanks for this great video explaining the ERTC filing. Question?-we filed 941-x 2020 in February 2021 and still have not received refund from IRS-have you how heard anything on this?
Yes, the IRS is very far behind and said it can take 6 months to process. Sounds like you are right at that point. I would assume you'd get your refund soon. I just had one person tell me she received hers last week.
@@Granda2012 Hopefully you will receive yours soon. But the IRS stating they are up to 6 months behind sounds like was not quite accurate as you should have had it by September if that was the case.
I can't attach anything here. If you e-mail my office, my admin will send it to you. contact@abandp.com. Let them know which periods you plan to file as the IRS has changed the worksheet a few times. If only 2020, we can send that one to you. If filing through 2nd QTR 2021, we can send the one where you have to determine the correct percentage to use for 2020 or 2021, but the worksheet shows both. If you are going to file for the 3rd QTR 2021, we have to send a different one as the figure used to calculate the non-refundable portion of the credit is now different.
Sorry, for some reason I never saw the notification of your comment until now. If you never filed the original, you should watch the video I did on that situation showing how to claim the credit on the original return. You can find that one at th-cam.com/video/CqQv3A6x2FE/w-d-xo.html
Yes, we do. We charge $500 per return if the qualified wages are calculated by you and submitted to us with all the other necessary paperwork. If you need us to assist with the calculation for qualified wages, there is an extra fee and we need to know if you had a PPP loan, etc. You can e-mail us at contact@abandp.com and we can give all the details.
Candy, I could not agree more with all of the other comments praising you. Easy to follow, to the point, great explanation. One question, if some of the payroll from a particular quarter was used to get PPP loan forgiveness, should you simply reduce the amount of qualified wages by the amount of payroll $'s applied to loan forgiveness? Thank you so much for your consideration.
Hi Soma, it's a little more complicated of an answer than a yes or no and depends on a few things. Are there wages that don't qualify for ERTC (over the 10K max, majority owner and/or related family, FFCRA sick/family leave wages, etc)? If so, use those wages towards PPP. But if all wages are ERTC qualified, you would reduce that by the amount of the required payroll for PPP. But remember, you can use non-wage payroll for PPP as well (employer health care expense, worker's compensation premiums, state employer taxes, etc). Reserve as much as you can for ERTC.
thanks for the video but i have a question…since we’re all going to file 3/Q/2021 starting next month 10/1, can we just claim the ERTC on the F941 instead of file the amended 941x afterwards …? i wonder if we can claim the ERTC on F941 on 3Q n 4Q then why we need to file amended F941x afterwards or do we have to file amended to claim the ERTC for 3Q n 4Q…? i m just kind of puzzle about it …🤔
Yes. My video will be for those who missed filing on the original return (didn't tell their payroll company they qualified, or they didn't know how to do it themselves). Filing on the original 941-X is the best option. :-)
I also know some people who had the 2nd draw PPP and the 24 week period ends towards the end of October. They are waiting to see the total allowable expenses they incur so they can reserve as much as possible for ERTC using only the minimum amount required (along with other payroll expenses) to meet the 60% of the loan amount to be payroll related. If they file for ERTC before they can calculate the PPP wages needed, they may take too much for ERTC.
@@CandyMesser thanks for ur prompt reply ….i m very appreciate ur help. So that means i can also claim the ERTC on the original F941 instead of filing the amended afterwards if i didn’t get PPP loan after 6/30/2021… s that right ..? bc i think it will be saving more time to me if for sure no PPP covered after 6/30/2021 then no need to file the amended n can directly report n claim the ERTC on the F941 ….do u degree ..?
@@paulinechan9971 yes, you can have the ERTC credit put onto the 941-X for 3rd quarter so you don't have to do an amended return. If you had a PPP loan in 2021, you just want to make sure you save enough wages for full forgiveness. If you used more wages earlier in the year toward PPP and received forgiveness and can use all of 3rd quarter wages for ERTC, you won't have to reduce the qualified wages for the 3rd quarter ERTC calculation.
@@CandyMesser again thx for ur prompt reply …😆 so u mean can have the ERTC put on F941 for 3Q not on F941x…n make sure the ppp loan calculation not overlapped the wages in 3Q ….right ? thx for ur reminding . 🙂
I have to say, you not only saved me thousands of dollars (that the payroll company would have charged me to file 941X properly), you also did it in a video that is several times shorter than anything I've seen so far. It was the shortest, most concise, and easiest to follow video out there. THANK YOU!
Martin, thank you for your kind comments. I appreciate it. And I am very glad my video helped you!
Blessings to you Candy!!! I am a small payroll clerk struggling with this and finding real resources, not sales pitches!!! THANK YOU!!!!!! YOU ARE A TREASURE!!!!!!
You are welcome! I'm glad I was able to help you.
Candy, thank you so much for your step by step guide to completing the 941-X! This is exactly what I was looking for. Every other video on this subject was trying to sell me their 2-hour seminar, or their worksheet, or something - anything besides just walking me through the process. I'm just a Mom, trying to help my son get the ERTC for his small business, started up during CoVID. Your 2 video's allowed me to apply for $82K+ in ERTC; an amount he can definitely use to cover increasing costs. God bless you and your business!
I am so happy to hear my videos helped you! And I'm glad you were able to help your son get cash he can use for his business! I wish him continued success.
Thanks, Candy. Very helpful. I was even able to use these instructions with slight changes for the later 941x form revision. Extremely gracious of you to offer this freely. I don't have words to express how criminal it is for agencies to charge 15-25% fees for this filing with the only rationale that they are helping you mine gold. I would be physically sick if I had paid upwards of $20,000 and then later found out how easy it was to do this myself. Literally took 2 hours for 2 quarters and much of that was triple checking.
I am glad you were able to use my video to do your filing. Yes, charging a percentage of the fee feels unfair to me as well.
EXACTLY!!!
Omg I just have to say I absolutely love you. So many companies are charging 15-25% of the refund amount just to process a 941x and with your easy tutorial I was able to do it on my own... We were already on the verge of closing our doors so every penny counts. Thank you do much
You are welcome! I'm glad I could help you.
Did you apply for now or 2019?
@@Caiomhescreation I did 2020 and 2021
@@Caiomhescreation There is no ERTC for 2019. To determine if you qualify for 2020 or 2021, you compare income in one quarter to the same quarter of 2019.
Candy you are an absolute blessing! Like Cathy I was searching for a video with detailed help on completing the 941-X for ERC and all I found was sales pitches. I did a few 941-X for the first couple quarters but I wasn't sure on the 3rd and 4th quarter for my recovery start up businesses. I can't thank you enough for your assistance!!
I'm glad I was able to help you!
Hi Candy! I am thankful for your videos. It saved me a lot of time and money. Would you please let me know what documentation needed to attach with Form 941X. I opened my business at the end of Sept 2021 so I only have Quarter 4/2021. Do I need to show revenue of the last 3 months of 2021? I don’t have 2020 income because It didn’t even open at that time. I really appreciate your help.
You don't send any supporting documentation, only the 941-X. And since you qualify as a recovery startup business, you claim just on that, so no other qualification (income reduction or mandatory shutdown) is required.
man I couldn't have done this without you!!!!!!! Thank you SOOOOOOOOOOOOOOO much!
You are welcome!
I’m watching your videos to correct my accountant’s work and get the 941x entries made correctly. Seriously.
I'm glad the video I created is helping so you can accurately claim the credit.
Candy, these videos are a lifesaver! I am new to business in general (midlife career shift!) and my business (craft beer taproom and restaurant) opened two weeks before Covid. It's been a challenge. Thanks to your help, I have been able to use my reports from Quickbooks payroll and the worksheets online and file my "recovery startup business" ERC credits on my own without having to spend a ton on professional help. Thanks!!
You are so welcome! I am glad you are finding the information I share helpful! I don't know if you feel the need for more support, but I'll be hosting with an attorney a workshop called Smart Start to Your Business and we'll be teaching about legal and financial issues to help you have a successful business. It's FREE! I believe the landing page will be ready in the next day or two. If you are interested, let me know and I can send you the link to the landing page. It will be a 1 hour live training each weekday February 7-11 with the opportunity to ask questions. If you can't make it, we'll be recording it to share after.
Thank you so much. Your video was incredibly helpful!
You are welcome! I'm glad to hear it.
Thank you for this video. You have been very clear in your instructions. Many of us are grateful.
I'm glad it was helpful for you!
This video is the best because I understand and feel comfortable to do it my own. Thanks for teaching me and others to do the job easier than we are expecting! I love this video a lot hehehe...
You are welcome! I'm glad my video helped you!
THEY CHANGED THE RULES AGAIN, NOW ITS WAGES PAID AFTER MARCH 12, 2020 , NEED A UPDATE TO THE UPDATE , but these videos are great ill stich it together from what your giving.
I'm not sure where you heard this is new. Wages from March 12-March 31 2020 have always been allowed for ERTC (claiming on the 2nd QTR 2020 return) and I demonstrate how to do this in the original training video I created in March 2021. Since the updated video is for changes after June 30, 2021, I do not reference it in this video. You can find the steps to claim March wages here: th-cam.com/video/mUrnakfeNvc/w-d-xo.html
Candy what would happen if you only put a simple statement in # 43 such as: “This return is being amended for ERTC purposes.” In this video at 12:30 you stated that you should put the reason why you’re applying as it relates to the 1st or 2nd eligibility criteria, but I’ve read articles that say just put “This return is being amended for ERTC purposes” in area 43. I tend to think less is more in some cases, but I also appreciate what you suggested. Will either statement be fine?
You need to specify why you qualify. Is it due to being shut down? Is it income reduction? However, I tell clients they don't have to be too specific. For instance, if someone is claiming the income reduction, I say they don't need to put "We experienced a 52% reduction of income in the quarter compared to the same period in 2019." Instead, say "We meet the income reduction requirements in this quarter compared to the same quarter of 2019 and therefore claiming the credit". Remember, the IRS has 5 years to audit returns. If you aren't specific enough, you may be selected for an audit (or asked for more information before they even issue you the credit.) In my opinion, it's better to let them know upfront that you are aware of the qualifications and meet them.
@@CandyMesser everything you shared makes perfect sense! I will definitely just add that qualifier info. Thanks Candy!
@@kteam4u Perfect!
Thank you for taking the time to make the video. Concise and clear. Immense help!
Thank you for your comment. I'm glad the video was helpful for you!
Hi Candy, Happy New year ! i wonder if u know anything about CalSavers ..? do all employers need to register as state mandated …? will u make a video about CalSavers program .? thanks for ur help!
Yes, I know a lot about it. I actually held a webinar in December about it (3 sessions which you can view on demand. The first is an overview of the program including the employer and employee responsibilities, the 2nd discusses all the alternatives that allow you to be exempt from CalSavers, and the 3rd is an overview of the portal with screenshots of different sections of the site). I also created a resource guide with the information including screenshots of the CalSavers portal and forms that may be needed. You can purchase all of this for only $97 at bit.ly/3BY9Dp3 I think you will find it very helpful and answer your questions.
@@CandyMesser thanks for the info.
@@paulinechan9971 You are welcome.
Dear Teacher Candy, thanks for your prompt reply. I got it. Please give me an advise , in the PPP forgiveness application, Example: I apply 100% paid for payroll $35,600. Can I recalculate according to the rule of 60% for Payroll and the remaining 40% claim to ERTC? Are all family members not allowed to claim ERTC? Once again, thanks so much and have a nice day!
No, if you filed for forgiveness using 100% wages (and had to show how you used the funds for forgiveness), you may not change it to 60% payroll and use the rest for ERTC. But, if you were one of the businesses that only had to certify you used the PPP funds for allowable expenses without saying what was payroll, return, utilities, etc, and had enough non-wage expenses to go towards PPP, you can do the 60%. If there is a majority owner, no family members specified qualify for ERTC, so put all of those (up to the max allowed) to PPP and non-family employees to ERTC as much as you can. The family members that do not qualify include a spouse, child (or descendent of a child), brother, sister, step-brother, stepsister, father, mother (or ancestor of either), stepfather or stepmother, niece, nephew, aunt, uncle, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
@@CandyMesser Dear Teacher Candy, Good morning! Thanks for your quick reply. I had a friend, he starts business in January-2020. Can he claim ERTC for Recovery Startup Business program? I really sorry to bother you so much. Thanks a lot. Have a Nice weekend!
@@JackTran99 It's not a bother. But no, recovery startup businesses are those that began after February 15, 2020.
@@CandyMesser Thanks. I got it. I’ll let him know.
Hi Candy, have you had success with any methods of e-file for 941-x erc or are you just paper-filing?
There is currently no way to e-file amended returns, so they are being mailed (although I recently saw an article that the IRS is going to improve its systems that would allow for amended income and payroll tax returns), but that has not been done yet.
Thanks! That's what I saw too!
@@J-fp9sm You are welcome!
Hello Candy
Do you have any videos on helping us to understand the ERC Sick and Family Leave Wages or ERC Sick and Family Leave Credit matters that are on Worksheet 1 of the 941 form? We provide sick/family leave wages but im trying to understand do we count sick leave wages only if there were a certain number of days or hours (or any amount) of sick/family actually leave taken or paid to employees?.Or do we count all sick/family leave wages regardless if it was paid out or not? In other words can we use that credit for wages that are sick/family leave eligible wages or sick/family leave accrued hours (which would equate to wages once used), but not all were taken/paid out. If you have a video can you please post it here? Thank u!
The credit for sick leave on worksheet 1 is not for general sick pay. It was for the Families First Coronavirus Response Act which allowed employers to pay employees if they had to stay home due to exposure to the virus or care for family members. You were able to claim a credit for the employer-paid Social Security Tax. You do not claim it for any regular sick pay you offer. One quick video I did to give an overview can be seen at th-cam.com/video/LHpDoASKcIY/w-d-xo.html. I also wrote a few blogs on this topic which you can read at affordablebookkeepingandpayroll.com/families-first-coronavirus-response-act-faqs/ affordablebookkeepingandpayroll.com/what-to-know-about-the-families-first-coronavirus-response-act/ and affordablebookkeepingandpayroll.com/paid-leave-to-employees-helping-family-get-covid-vaccination/
If you did claim this credit due to paying wages to a worker who was home due to reasons related to COVID, you would reduce the qualified wages for the ERTC as you can't double-dip.
@@CandyMesser you are sooooo freakin awesome! I mean taking time out of your busy day to help your TH-cam listeners. How grand! Thank you so much for the response and I’m just so grateful I found your highly valuable channel!
@@kteam4u you are welcome!
Thank you for this very helpful video as it was very hard to find reliable information on line. My company had over 20% reduction in income in Q3 & Q4 2021 when compared to the respective Quarters in 2020 but I think I heard you say that you compare to the respective Quarters in 2019. Please confirm that I use Q3 2021 vs. Q3 2019 and Q4 2021 vs. Q4 2019. If it is vs. 2019 and my income rebounded in Q4 2021 and I didn't qualify but then dropped again in Q1 2022, can I claim ERC again in Q1 2022?
Hi Julie, yes, you have to compare your earnings in 2020 and 2021 to the same quarter in 2019. And although the ERTC was originally extended through Dec 2021, it was later changed to Sept 2021 (only recovery startup businesses that began after Feb 15, 2020 can claim the credit). And there is no ability to claim in 2022 as it was not extended.
Start up business formed 5/1/21- My original Q3 941 filing didn't include Part 3:21 on the filing- what do I put on the 941-x part 3:30?
Hi Lyn, part 1 of the worksheet is using the originally filed wages listed on line 5 to do the calculation in part 1. You should be able to do this using your original 941. If you didn't claim the ERTC credit on the original return, you would complete the 941-X using the figures you calculate on the worksheet. So look at line 5a column 1 on the originally filed 941 for wages paid prior to July 1 (you don't mention filing a 2nd QTR return, but if you paid non-majority owners in that period, you can qualify then too), or line 5c column 1 for wages paid July 1 or later to calculate the non-refundable portion of the ERTC which is what I'm doing 3:21-3:30.
I SO CONFUSED. WHAT IF I DID NOT FILE THE ORIGINAL 941 FOR THIS QUARTER?? CAN I JUST DO THE SAME TEACHING METHOD YOU SHOWED US IN 2020? THIS IS A HARD TASK.
If you did not file the original return, you claim it on the original 941. You do not use the 941-X and the process is the same to calculate the qualified wages, total ERTC, non-refundable and refundable. But, you put on the 941 form where it lists those specific items.
@@CandyMesser wow awesome. thanks.
@@gabrielvincent6537 You are welcome!
@@CandyMesser Hey Candy, I did have one more question. What about the REVOVERY START UP? Is that original too or the 941X. The startup has not filed a 940 yet. No one has been able to answer this one. Thanks!
@@gabrielvincent6537 You claim the credit on the 941 if you have not yet filed, You use the 941-X if the credit was not claimed on the original filing and is used to claim the credit. Since you have not filed the original 941 form, you will calculate the ERTC figures and include on the original 941 form. You need to file quickly if going back to 2020 as the period to claim the 2nd quarter credit expires in a few months.
Candy, thanks for the video. One question I'm having a hard time finding guidance on... As a paid preparer, can my client sign electronically on the 941-X (ie docusign)? I know as a preparer I need to sign physically, but I was curious about the client?
I have been signing with my Adobe signature that looks like it's been written, so if they can do the same, I think it's fine. But if it's sent through Adobe and it types the text with the date/time it was signed, I'm not sure the IRS would accept that. We have sent the forms to the client to sign/mail.
Great Video. Thanks! Quick Question, Do you send in the worksheet with the 941X?
No, it is only used to help you determine the figures to put on the 941-X.
Thank you , finally a video that really helps. Question, when using the work sheet 2,... On line 1b do I use the actual wages paid (from 941 line 5a/5c) or the qualified wages NOT covered by PPP. which amount would we use to determine
line 1e/1i ? and is this the amount I put on line 30 on the 941X?
You'll use wages reported on the original 941 for section 1 which determines the non-refundable portion of the ERTC. You'll put qualified wages for the quarter on line 30.
@@CandyMesser what is the rationale for using the wages on the orginal 941 instead of the qualified wages to get the nonrefundable credit/employer share of ss tax?
@@CandyMesser also, do I have to decrease wages on 941x Part 3, Line 6 by PPP and owner’s wages or is it only done on Part 3, Line 30 of Qualified Wages?
@@marinela8682 It's the requirement of the IRS. The instructions state to use the Social Security wages originally reported on the 941. The qualified wages are used to determine the ERTC which is the total credit. The non-refundable portion is the employer share of the original SS tax paid (or if claiming in 3rd or 4th QTRS 2021, the employer cost of Medicare).
@@marinela8682 You remove all non-qualified wages from total wages which then becomes the figure you report on line 30. You don't put anything in part 3 line 3 as wages weren't wrong on the original filing. You only put amounts on the 941-X for figures that need to be updated/corrected. Your original wages on the 941 are correct. You are only completing the 941-X to claim ERTC, so you'll fill in lines with adjustments which for ERTC are the refundable, non-refundable, qualified wages (and medical if applicable).
Hi candy, would I need to provide the w2s as well in order to receive the credit or just do the numbers myself and apply in the boxes
No W2s are necessary. The IRS has access to that information already. You don't even submit the worksheet. Only the 941-X for each quarter you are claiming ERTC.
what if there was a PPP loan forgiven? how do tou apply to qualifued wages? how do you determine period applied to qualified wages?
You must determine how much of your wages (and in what quarter) you are going to apply to PPP. I don't know if you had both loans and when your funding dates were. But as an example, for the 2020 loan, if you had a 24-week period and you were funded in April or May, we have suggested that you apply for ERTC for March 13-June 30, 2020 (if you have any non-qualified wages such as qualified sick and family leave, work opportunity credit, majority owner and related family, etc, that these amounts paid in the PPP covered period can be applied towards forgiveness). Then look at the remaining wages in the covered period needed for PPP. Hopefully, you paid enough to use 3rd QTR through the closing date of the covered period for forgiveness. If so, and you have excess wages remaining, you can then claim ERTC for any employees who hadn't reached the max $10K yet. By doing it this way (looking at wages per employee per period and finding out how to allocate them), you can max ERTC and PPP forgiveness. I used a client's info as an example of what we did. If you haven't already seen it, you can find it at th-cam.com/video/ExVnqFEnOa4/w-d-xo.html It is a bit complicated and if you have trouble determining how to allocate wages to maximize your claim, you can reach out to us for help. 310-534-5577 or contact@abandp.com.
Great videos and a huge timesaver! I talked to so many people on the TurboTax community boards about the ERTC and got sent in all sorts of directions before I learned about the 941-X from your video. I just about finished my 2021 taxes in TurboTax (sched C - sole prop with one W-2 employee) and wanted to ask about filing these Q1 2021 and Q2 2021 941-X forms. I have them filled out and ready to go and plan to send them in shortly after submitting my 2021 taxs. I had a call the other day with the IRS about the ERTC and they mentioned having to make some sort of adjustment to my W-2 employee salary on my sched C to support the 941-X credit? Am I misunderstanding this. Or am I missing a step that I need to do on my 2021 taxes? Or do I just file norrmally and then send in these two 941-X forms for whatever credit I'll get back?
You don't adjust employees' wages on their W2 forms (their wages paid aren't being changed, you are receiving credit against qualified wages you paid), but you will have to amend your 2021 tax return to account for the credit you will be receiving if you file prior to receiving the credit. Or, you can assume your calculations are correct, reduce your expenses by the credit you expect, and file. I have been suggesting that clients review the information with their CPA to make sure the amounts amended or adjusted are correct. If you file your own return, there may be a place in Turbo Tax that asks if you received the ERTC credit and can help you adjust the return by the ERTC amount.
@@CandyMesser Thanks for the response! I meant to post that on my personal TH-cam account not on my company account, ha ha. I talked to the IRS and have the calculations for the 941-x right, they said I need to make the wage adjustment on my schedule C. So if the wages listed currently are $2,650 on line 26 (does not include the $26,000 elective 401(k)) do I just reduce that with the $14,000 and make the total zero? and then file the 941-x forms separate from my 2021 taxes?
@@jonkoerber4723 I am not a tax preparer, so you might want to ask a CPA, but the wages that you report on Schedule C (employer cost) must include all amounts paid (the $26,000 401K isn't subject to the payroll taxes as it's a pre-tax deduction), but as the employer, you incurred the full salary expense. So I assume from your numbers your actual wages were $28,650. If you reduce this by the $14,000 credit you received, you would report $14,650. But again, I don't give specific tax advice since I am not a CPA, you might want to ask a tax preparer just to b sure.
Some are saying in Part 2 check 5c (since taxes were withheld from W2 employees) and not 5d (what you indicated to mark off in the video). Which one do we check if applying 941X for just ERC purposes? Thanks
I have been doing these returns since early 2021 and none of my clients have had issues checking 5d. The reason I say not to check 5c is that you are not claiming credit for taxes withheld from employees. You would check that if there had been a mistake on an employee that reduced the amount owed and part had been owed back to the employee when filing the 941-X. The ERTC is a credit for keeping employees on payroll, so you calculate on the employer share of the Social Security (or Medicare if after 2nd QTR 2021) for the non-refundable portion. There is no adjustment to an employee's wages or taxes, so 5c is not checked.
Dear Teacher Candy, this morning I drank coffee with my old friend who opened a business in February 2021. So, can he claim ERTC with Recovery startup business? Looking forward to hear your advice. Thank you.
Assuming he had employees on payroll that can be used for qualified wages, yes.
@@CandyMesser So he can claim ERTC as Recovery Startup Business with Payroll of the Quarter 3,4/ 2021? Thanks so much my dear Teacher.
@@JackTran99 yes, when claiming as a recovery startup business, file for the third and fourth quarters of 2021.
@@CandyMesserDear My Teacher Candy, He had S-Corp Company, fill out Tax with 1120-S. This is his 2rd shop started in Feb.2021. Can he still claim ERTC as Recovery Startup Business? He had paid payroll for employees. if he can, he should can Quarter 3, 4-2021. Thank you.
@@JackTran99 Yes, he can.
Hi Candy, your video instructions are clear and so helpful! Question: for a recovery start up business (started November 2020 with one employee), can I claim the ERTC for the 1st and 2nd quarters of 2021 even though we were not in business in 2020 except for the last two months? If so, which worksheet do I use for those quarters? I think I'm good on the 3rd and 4th quarters 2021 because your instructions are so clear!
You can only claim the ERTC in 1st and 2nd QTRs of 2021 if you were under a mandatory reduction of services/shutdown since you don't qualify for the income comparison guideline which requires the comparison to 2019. If you did not have a shutdown requirement, you can only claim the recovery startup for quarters 3 and 4. If you do qualify, you can use worksheet 2 from the updated forms in July, or the one released earlier (if you need a worksheet, you can reach out to my staff at contact@abandp.com to have it e-mailed to you.
Thank you for the video @ Candy Messer. For a recovery startup business formed on March 5, 2021, can you recommend an acceptable entry for Part 4, Line 43?
We are a recovery start-up business having begun operations March 5, 2021, and are not otherwise eligible for the ERTC based on a full or partial suspension of business operations or a decline in gross receipts.
@@CandyMesser Sincerely appreciated.
@@nolanberggren8784 You are welcome.
Such a blessing thank you 🙏 greatest teacher/preparer I fully understood everything step by step ❤️
I'm so glad to hear this. Thank you for your kind words!
In the video, you calculate a Nonrefunable portion of the ERC, attributed to Medicare (and previously Social Security) Wages... so if I am understanding everything correctly, The government is taxing the ERC as well, by Disallowing a certain portion of the claim... is that correct? We've already paid Medicare (or SS) taxes on these wages... so they're basically double dipping here, unless I am missing something.
I don't why they separate it this way and call it non-refundable. But if you paid all your taxes, you will get the full ERTC you calculate. At least the info we've received from clients who have received their refunds. Not only are they getting the full refund, but interest as well.
@@CandyMesser so if we’re filing a claim (we’ve already paid full taxes on wages) we don’t have to calculate the Medicare/Ss withholding amount… and reduce our claim by that amount?
@@jobjones4796 You still must calculate the employer share of the tax (prior to 3rd QTR 2021 it was on Social Security wages. For 3rd QTR 2021, it is Medicare wages). You must still calculate the non-refundable portion and subtract it from the total ERTC you calculate from qualified wages to determine the refundable portion an enter on the 941-X. But as I mentioned before, the clients who are telling us they have received their checks are getting the full amount plus interest. So why the IRS splits this into 2 parts is still not completely clear to me. But follow all the directions on the worksheet to properly calculate all figures.
Thanks Candy - I just want to verify Qtr 1or 2 2021 based on SS Wages - 5A 941 multiply by 6.2% for Line 18A 941x. Line 27 941x is 50% of wages line 30 941x. Qtr 3 2021 wages are based on Line 5C 941 multiply by 1.45% for Line 18A 941x. Line 27 941x is 70% of wages line 30 941x. my head hurts lol
If you only have wages in 5a and not 5b (tips), then yes it is 6.2% of your Social Security wages which is put on line 18a. But for 2021, line 27 is 70% of qualified wages listed on line 30 (2020 was 50%). For QTR 3, it is 1.45% of 5a and 5b. Line 27 is still at 70% of qualified wages.
@@CandyMesser thank you for the clarity! You rock!
@@pracsuz you are welcome!
Candy, your videos are so helpful! I own my company so I don't believe I can include my wages in my calculations. I have run some reports in my payroll system and crunched a few numbers. What specifically do I delete from my previously filed 941s to make sure I am not claiming any of my own wages or taxes in my calculations? Just my wages?
You don't adjust the requested number from the 941, but you do adjust the qualified wages subject to the ERTC credit. For instance, section 1 of the worksheet asks you for Social Security Wages to determine the non-refundable portion (2020 through 2nd QTR 2021) and Medicare Wages (3rd QTR 2021). This number is not adjusted on the worksheet. But when you are determining qualified wages, you would remove your wages.
@@CandyMesser Thank you!
@@sharonpowell4438 You are welcome!
@@CandyMesser one more question! :) What is the deadline to file these amended 941s forms?
@@sharonpowell4438 The IRS allows 941-X forms to be filed up to 3 years after the original filing date. But I don't suggest waiting. I'd file now. It's taking the IRS 7-8 months to process forms and we're headed into tax season where more mailed documents will be received and slow down the processing time even more.
Hi Candy, are businesses still receiving Q4 2021 credit? Or only recovery start ups? Also, when calculating the full ertc credit amount, do you use the refundable portion of retention credit (line 26), or the total amount (line 27)on the 941x's? Thank you for your help!
Only recovery startup businesses can claim ERTC for 4th QTR 2021. And you calculate refundable and non-refundable portions of ERTC and both are listed on the 941-X. Non-refundable is listed on line 18(a) the refundable portion goes on line 26(a). You then add these together to get the total on line 27.
@@CandyMesser What does non refundable portion mean ? I understood that is the employer's share of SS tax but it doesn't make sense to me when it is called non refundable. Thank you so much for your clarification.
@@Hannah-hc6pn I don't know why they used the word non-refundable when you do get it back except for the fact that it was the portion of the tax you were required to pay as the employer on the wages reported on the 941. What will happen is that when you get the refund, the notice splits it into 2 parts. The non-refundable is shown as a reduction of the tax due and the refundable portion is shown as a credit.
Hi Candy, Thank you for this very helpful video! Do you know if after filing Q3 2021 941-x for ERC, will employers need to make an adjustment on W-2 forms for 2021?
You do not update W2 forms. Wages for employees were not changed. You only used wages to determine the ERTC credit.
Hi Candy, could u make video about accounting and reporting toward ERTC which employers received for 2020 in the year 2021. Thank you for your support!
I'm not quite sure what you mean. Do you mean how to post the refunds you received in 2021 but it was for 2020 941-X forms?
@@CandyMesser yes that is what I mean. Because I submitted 941X in 2021 (for 2020) when the FS and 990 was closed (6-30-2021). In addition, I did not do any entries because I was not sure if IRS approves ERC under partial shutdown. Thanks for your time.
@@hoanganhdo9770 What I would do is create an "other income" account called ERTC credits received (or similar), and post the deposit when it was received (in 2021) since your books are closed for 2020. BUT, the CPA would have to do an amended tax return for 2020. If they want the credits to be in 2020, you can do an adjusting journal entry and they can give you the steps to enter that info. Otherwise, leave the deposits as is in 2021 and they can amend 2020 with the credits received last year and exclude that amount for 2021's tax return even though it's on the 2021 books since they will have accounted for it already. I hope this makes sense.
@@CandyMesser Thank you so much for your response. As far as I research for NFP (we are 501C3) toward ERTC: The followings are my considerations, please kindly let me know if I understand correctly or not?:
(1) IRS has not clear guideline for exempt-organizations like us: Whether a tax-exempt organizations must file an amended return if the ERC wages are not associated with a UBI activity.
(2) Regarding accounting and reposting: We must apply only ASU 958-605-25 Revenue recognition and 958-310-50 disclosure because we are not-for profit.
Under these rules above, I understand that
(3) FS ended 6-30-2021: I should restate the FS by adding Government Grant for each month of 2020 because it was conditional contribution and the conditions were met by each month (partial suspension) under 958-605-25. Also, the disclosure should be added as well.
As a result,
(4) The 990 should be amended as well because FS was changed due to restate.
Ironically, IRS did not have guideline for non-exempt toward restate FS and amended 990.
@@hoanganhdo9770 I am not a CPA and do not file 990 forms, but I assume you must amend your 990 form. Please contact your tax preparer to verify.
Thank you so much for sharing your knowledge and time.
I am filing a 941x for Q3 2021, I am choosing adjustment in part 1 rather than credit so I can have it applied to my Q1 eftps pymts.
Do I check "4c" in Part 2?
Also, as I understand it, If this is sent in today Q1 2022, the adjustment will apply to tax pymts due in Q1 2022. What happens if the ERC amount due to me is higher than my tax liability for Q1 2022? How do I get the difference sent to me or have it applied to Q2 2022?
Yes, you check 4c if selecting an adjustment. And if the credit is greater than your liability, you can continue to apply to the 2nd QTR 2022 until the credit has been used completely.
Candy, sorry again! I though you could only deduct the employer half of Medicare, you have deducted both haves ( half on line 18a and the other half on line 26). Is this right? The worksheet does not say to carry the total on line 1g to line 18a but clearly says to carry line 2i of the worksheet to line 26 on 941X. Again is this right or should we only be deducting the employers half?
Thanks!
Sorry,I see it being deducted out on worksheet 2. I think on your original video you deducted it twice. I will go back and look again.
Like in the example I just shared, it isn't half of the employer tax on 18 and the rest on 26. The employer paid Medicare tax is used to determine the non-refundable portion of the ERTC. You then take this and subtract it from the amount you calculate for ERTC to get the refundable portion of the ERTC. I don't know why the IRS calls it non-refundable as you get the full ERTC, but this is what you must do to properly complete the worksheet and 941-X.
I can't find the work sheet page 4. I wanted to print it to follow along
I can't attach it here. E-mail my office at contact@abandp.com and we can e-mail it to you.
Hi Candy - I have a question. For form 941x Q2 if you also have wages from Q1 you can add them on Q2 2020. Now on the worksheet in Step 1a when it asks to enter the amount of social security wages are we entering Q2 only or Q1 and Q2 wages combined? Thanks!
You only use the amount that was originally reported on the 2nd QTR 2020 941 form. This is to calculate the employer share of the Social Security tax which becomes the non-refundable portion of the ERTC. (Not sure why it's called non-refundable because you qualify for the full credit).
On section 43 should both of the years be 2021? Thank you so much for the video!! Lifesaver today!
Hi Amber, I'm a little confused on your question. 43 asks for an explanation of why you are filing for the credit. You would explain the details for any period in which you are claiming (you can use the updated July 2021 form to claim 2020 or 1st/2nd QTRS 2021 credits as well). You will enter the period on the first page as well as the top of every subsequent page. So your comments should be for that specific quarter. For instance, if you are filing in 3rd QTR 2021 and the reason is due to at least a 20% reduction of income compared to the same quarter in 2019, that is what you would say. If you are filing as a recovery startup business, that is the explanation you'd use. I hope this answers your question. If not, please let me know.
I also picked up on this
I see what you mean now. Even though I said 2019, I typed 2021. I guess that is what happens when trying to reach and complete the form at the same time. OOPS! It should have said there was a reduction in 2021 compared to the same quarter in 2019. I'm so sorry about the confusion I caused with that error!
@@beverleykatic3991 So sorry for that mistake, I was typing and talking at the same time. I said the correct year but typed the wrong one. So sorry for the confusion!
@@CandyMesser WHat you are not perfect!!!!!🤣🤣🤣Just joking, your videos are invaluable to many. Thank you for all that you do.
Hello, very helpful videos. I've been working with a revenue officer since January 2021 because they're asking me to pay the taxes due for the quarters I applied for the ERTC which I didn't pay. I gave the officer the 941X and he's filed for me and even put expedite. To this day the system shows the return was accepted but still no movement after 1 year. On part 1 of the 941X I checked box 2 because the amount I'm due is more than the taxes owed. My question is if I file another 941X today and check box 1 on part 1 to just have the money applied to any taxes due, does this make the process faster so they take my account out of collection? and will the adjustment only cover taxes due for the quarter I filed for and I will not receive the extra money towards future taxes? Thanks in advance
Your situation is a bit difficult and I don't necessarily know the best answer since I'm not an agent. But what I know in general from other scenarios I've seen in the past (not related to ERTC claims) is that if you have a credit due from one period, but tax owed in another, (or income tax refudn but outstanding payroll tax) the IRS will not send the full refund and then have you pay the tax for the outstanding balance. They apply the credit to the tax owed. So I don't believe that filing another will help for a couple of reasons. The first is that the IRS is taking up to 1 year to process the forms (most clients who let me know they got the refund had it closer to 6-8 months, but one client waited a year for their refund for 3 quarters). The paperwork will be sitting in the pile of documents for months and not help you get the refund any quicker. Secondly, by the time they do process it, they most likely will have sent the refund after applying the amount to the tax due). I think the revenue officer marking it to expedite was the best option for you. Keep in mind that him expediting it could just mean rather than 6-12 months, it will still take a few months for them to process, apply the credit to the unpaid tax and send a refund for the difference. But once they finally apply the credit to the tax balance, you should receive the difference back. You may want to contact a tax advocate (this is separate from the revenue officer) for assistance to get it resolved. I'm sorry you are dealing with this for such a long time! But they shouldn't have you in collections if you are indeed owed the ERTC credits which should be applied to your balances. Find information on the tax advocate here: www.irs.gov/advocate/the-taxpayer-advocate-service-is-your-voice-at-the-irs I wish you good luck getting a resolution!
@@CandyMesser Thank you so much
@@MarkWilson-to4kw You are welcome!
Hi Candy, is the change for 2021 Q3 simply with regard to the refundable vs. nonrefundable breakout (due to FICA vs Medicare employer tax), but does not impact the potential total credit? OR...does the change for 2021 Q3 actually impact the qualified wages that can be used to calculate the credit itself, thereby increasing potential credit by increasing qualified wages from FICA wages to Medicare wages? Thanks!
The change is only in regard to the calculation of refundable/non-refundable amounts of the credit. You can use up to $10,000 in qualified wages per employee per quarter in 2021, and it's the same whether 1st, 2nd, or 3rd quarter.
Thank you! Would you use Medicare wages for all 3 quarters (up to $10,000 per employee), as that would include additional items like employee 401k contributions and health plan costs, which count towards 'qualified wages' ?
@@J-fp9sm no, you use gross wages. Total paid prior to any deductions.
Thanks!
@@J-fp9sm you are welcome!
Hi Candy. Are refunds issued solely by filing the 941x? It's been several months since I filed them and we haven't heard anything, so I'm wondering if I missed something. Thank you for all the wonderful info you provide!
Yes, you only file the 941-X. But if it's only been several months (I'm thinking you mean 3 or 4), you will have a few more to wait most likely. Clients who have started to receive their refunds had to wait 8 months. And keep in mind if there was a reason you would not be given the refund, the IRS would send you a written notice saying so.
@@CandyMesser Since refunds are taking so long, Instead of requesting a refund for Q3 2021 ERC, can I choose not to make eftps tax pymts for Q4 2021 and Q1 2022 totaling the amounts owed to me? If so, how do I reflect this choice?
@@Amel_Vis you would need to file the 941-X this quarter and choose adjustment in part 1 rather than credit. Also put in the notes you'd like to apply the credit to 4th quarter 2021 liability. The adjustment is posted to the period the 941-X is filed, so if it's postmarked in January and you don't pay 4th quarter tax, you'll be charged a penalty and interest for the amount due.
Hi Cindy, Very helpful video for me. I have used wages for PPP forgiveness in Q3. Where do I subtract that?
You don't subtract it on the form you are filing (941-X). You look at the wages in the quarter and subtract from there to determine qualified wages. What I recommend when calculating wages is to first see if you filed for the 8 weeks or 24 weeks for the covered period. Determine what amount of wages you used in total during that period for forgiveness (remember that payroll costs also include state employer-paid taxes, 401K match, Worker's compensation premiums, healthcare premiums, etc) Once you know your non-wage payroll costs, you know the amount of wages you need for forgiveness. Then look at the wages for your employees and see if anyone is not allowed for ERTC (majority owners/related individuals). Who has wages over the $10,000 max - excess wages go towards PPP. If you still need wages to cover, see how much and take away from employee's wages for ERTC until you have full forgiveness. The remaining amount in the quarter can be used for the ERTC calculation.
@@CandyMesser thank you so much!
@@pjjain1898 You are welcome!
Hi Candy, thank you for the video. How do you determine the qualified wages 2a (total gross wages including OT and sick time?) and qualified health plan 2b expenses for worksheet 4 if my 941 doesn't have anything on line 21 - 22 as we did not claim the ERC before.
Also, if filing for quarters prior to 07/2021, do I use this July 2021 version of 941X with the worksheet 2? Thank you.
Joanna, to determine qualified wages, you must look at the payroll for everyone paid in the quarter. Remove any majority owners and related individuals (if any), and also determine which wages were used toward PPP forgiveness (if applicable). Once you have what remains, remove any wages that have received other credits (paid sick/family leave, opportunity zones) if applicable. Then, you reduce the qualified wages to $10,000 max per quarter in 2021 or year in 2022. Qualified health plan expenses are the employer share only. You can still use the 941-X from July 2021, but you must use the former worksheet to properly calculate the non-refundable portion.
@@CandyMesser Thank you for the explanation! This is great! Thanks!
@@joannaorloff535 You are welcome!
@@CandyMesser i have 4 owners that are all related and all own a quarter of the business. I believe I remove all 4 owner’s wages. Is this correct?
@@cassandrabrookerosas5222 I don't have enough info to answer this. Are all 4 owners equal ) or at least each owns less than 50%?) If no one owns more than 50%, there is no majority owner, so all wages can remain. If one owns at least 50.01%, then none of the related individuals can be included.
Hi, I have a quick question; In this video you checked mark Item 3 on Part 2, but in the original video it was not selected. Also, in the last page (Part 4) you had checked mark number 42 in original video but not in this one. Could you please clarify? Will these selections make a difference as far the IRS approving the credit? Looking forward to hear from you. Thank you so much for your time and great content.
Yes, when I made the first one, I was assuming since the credit did not affect W2s, we didn't need to check the box in section 3 since no amended W2s had to be submitted. But since it says we have filed or will file, I started to check it. Since the W2s aren't being updated, I don't think it would affect the credit you should receive if you didn't check it.
Thank you for the great explanation and video. question: for 3rd quarter we don't have to do anything with Employers SS taxes?
No, the calculation changed to use Medicare employer portion of the tax paid rather than Social Security tax paid.
Candy, if I have to claim ertc for 2,3,4 quarters for 2020, do I have to do separate 941x for each quarter. I have seen some say that you can just put it on 4Q 2020 941x so in essence only one 941x for the year 2020? Thank you!
You must file each quarter separately. You will be asked the Social Security wages for the period and you will determine the non-refundable portion of the credit from that amount. Your qualified wages for the quarter will determine total ERTC, and the difference between ERTC and non-refundable portion is the refundable portion.
If the owner of the business is included in medicare wages should i subtract his earnings first for the quarter then put of line 1b of the worksheet? also would it be ok if i used the latest 2022 941 x form for 2021 qtr 1,2,3 is that ok? or must i use the 941 x 2021 form? thank you so much your so sweet and awesome
No, for the non-refundable calculation, you use the figure originally reported on line 5 of the 941. You remove non-qualified wages to determine what goes on line 30. And yes, you can use the newest 941-X form.
appears this ERTC ended 1/31.. .probably a good thing.. got so sick of the pressure of it, my head was about to explode
of course the self employed covid sick credit is still available .
dont know if you ever did a vid on that one
from 7202
Hi Boris, yes there were a lot of ERTC mills aggressively targeting businesses to claim the credit. Many reached out to clients I'd already helped saying they could get $32,000 per employee and then they'd ask me why our calculations didn't add up to that much. We had to explain max wages, PPP, not everyone made $10K in the year (2020) or quarter (2021).
I know I did videos and wrote blogs on CA supplemental sick pay and FFCRA. But it's been a while, so I don't remember all the details.
@@CandyMesser u kick ass Cindy.. ur the best
@@CandyMesser "ERTC mills" haha haha.. i love ur verbage girl.... i had some heavy clients tell me "my buddys firm is getting 1 million ERTC refund":.... i said back , do you want to share a striped suit with ur friend?
@@Boris_Greca 🙂
@@Boris_Greca Ha Ha!
Hello, thanks for the helpful vidoes. Do you have one that focuses on Q1 2021 or a completed 941X that you can share?
I did not record another video for the 1st QTR 2021, but it's the same method to calculate the figures as I did in my original video for 2020 except you use 70% of the qualified wages to determine the ERTC. The link to that video is th-cam.com/video/mUrnakfeNvc/w-d-xo.html
Dear Teacher Candy, Hi Good morning! My friend business is not decrease in revenue in 2020, but base on Government order shutdown and distancing. We claim for ERTC, so how many Quarters will we claim in 2020? Looking forward to receive your response. Thank you. Have a nice day!
You can claim for the dates under a mandatory reduction of services (for a section of the business that was at least 10% of total revenue), or full-shutdown. I can't say how many quarters can be claimed because I don't know your location/circumstances. Each jurisdiction made its own rules. But let's say they were under a mandatory shutdown from the end of March 2020 until November 15, 2020. You can claim the full quarters for 2nd and 3rd 2020 (including wages paid March 13-31) and Oct 1 through November 15 for 4th QTR. Basically, you can claim for the period you were impacted by the closure. If the mandate was lifted mid-quarter, you can only claim the dates the order was in effect.
Dear Teacher Candy, thanks for your instructions. According in this situation, if Quarter 4 decease 37% of Quarter 4-2019.So, Can I claim ERTC for this Quarter 4? Thank you.
Dear Teacher, please send me the work sheet how to calculate from 941 to 941x. Thank you.
@@dungchi5688 No, you may not claim it for 4th quarter 2020 as you must have a 50% or greater reduction in 2020 compared to 2019. However, with the rule change for 2021, you can use a prior quarter to determine if you qualify for a quarter in 2021. The reduction required for 2021 is 20% rather than 50%. So using the rule you can use a prior quarter to claim ERTC in 2021, you can claim 1st QTR 2021 stating you are using the prior quarter's reduction of more than 20% to claim the reduction of income qualification for 1st QTR 2021.
@@dungchi5688 Please e-mail contact@abandp.com and my staff can send it to you. There is no way to attach it here in the comments.
Hi Candy,
Thank you so much for your life saving videos. I really appreciate your time and afford to help small businesses to get as much as money they can without paying lots of money to others.
I have one question and hoping you have the answer. Our business was lucky and got the Restaurant Revitalization Fund last year but I am not sure if that will be consider like PPP and if payroll and other expenses paid with that fund can't be included in ERTC.
I really appreciate if you can answer to see if we can apply or not.
Hi Minoo, expenses other than payroll or employer-paid healthcare are not included for ERTC. Also, I don't know if you saw the video I did about how to track the RRF funds. If not, the link is th-cam.com/video/VfR7QcRzjJc/w-d-xo.html
@@CandyMesser Thank you so very much for your respond. I really appreciate it very much.
@@minooomidvar56 You are welcome!
Hey Candy. If my business first opened on January 30, 2021 would I be able to apply for ERTC Credits in 2021 for Q1, Q2, Q3, and Q4 even though I don't have gross receipts in 2020 since my business wasn't created yet? Some context for you is that I was a business with a partial shutdown which would make me eligible for Q1 2021 and Q2 2021. For Q3 and Q4 it seems that I would qualify as a Recovery Startup business. Thanks for all your knowledge!
Yes, it sounds like you qualify for ERTC for 1st and 2nd QTRs based on the shutdown. Because you began after Feb 15, 2020, you fall into the recovery startup business for QTSs 3 and 4.
Hi Candy - your videos are a fantastic resource! Do you happen to have any examples of what adjustments look like if qualified sick leave wages were claimed and the ERTC wasn't? Just want to be certain we aren't overthinking the process.
I'm not sure I understand the question. Do you mean you had already claimed sick wages and now you want to claim ERTC? If so, you must remove any wages for the qualified sick and family leave from the qualified ERTC wages if you received federal credits (if regular sick pay and no federal tax credit, they do not have to be removed). So if an employee earned $10,000 or less in 2020 or per quarter in 2021 and they had qualified sick/family leave, you would reduce their qualified wages for ERTC by the amount of the sick/family leave wages. But, if they were paid more than the $10,000 and if the sick wages don't reduce the regular wages less than the $10,000 max for the year or quarter depending on the year, you can claim the max for ERTC. If this is not what you meant, let me know and I can answer your question.
Hi Candy - Can closed business still apply for the erc credit
As long as you had qualified wages in any period of the ERTC, yes.
Hi Candy. Thank you for putting these videos together. They're very helpful. I need clarification on item 2b under Step 2 of Worksheet 4, "qualified health plan expenses allocable to qualified wages for employee retention credit". We pay 75% of our employee's health premiums and also have a Section 125 Cafeteria Plan that reduces the employee's taxable income by their portion of premium. Would this scenario allow me to enter the employer portion of our medical expense amount on line 2b? (my 941 part 3 line 22 is blank) Thank you!
Yes, you can claim this expense as long as you didn't claim it toward PPP forgiveness. Anything used for PPP can't be used for ERTC. But if you did not use for PPP, you may claim it on ERTC.
@@CandyMesser Thank you for your reply!
Hi Candy, Are start up businesses the only ones who can apply for 4th quarter of 2021 ?
Yes. Originally, the ERTC had been extended to Dec 31, 2021 for all businesses, but it was then changed to only be recovery startup businesses.
@@CandyMesser ok thanks. There’s been so many changes and rearranges that i just wanted to double check to make sure my research and understanding was correct. As always Thank u!
@@kteam4u Yes, it's hard to keep track of all the changes. I'm glad I was able to answer your questions.
@@CandyMesser yes im glad as well, but sad I waisted time doing the 941x for that quarter lol. Oh well, I’ll hold on to it in case there’s a change in our favor.
@@kteam4u It most likely will not be changed again, but it doesn't hurt to hold it since we never know what will happen. 🙂
Hi Miss Candy ,
Thank you for the video . One quick question . Any video of how to do the 941 for national sick leave benefit . Is there a different criteria for setting up the sick leave pay tab in quickbooks (for quarter 3,2021) the worksheet is calculated differently ?
If you were paying sick leave that qualified for the credit, I would have set up a different pay item to be able to track it since it's different than the general "sick" pay. For instance, we set up for our clients one called EPSL for the sick leave paid to the employee for their leave that was needed, or EPFL for pay to care for a family member. This allowed us to know the wages that qualified for credits by looking at a payroll summary. If you did not originally claim it on the quarter's 941 (we claimed in the quarter on the original filing), then you would complete the 941-X to claim the credit. I did not intend to create a video on this credit. The worksheet will walk you through how to do so, but if you need assistance, I do offer consultations and can help you understand the process to claim the credit.
Hi candy I have 2 businesses one was shutdown my trucking company I receive a ppp loan in 12/2021 I’m trying to file my original 941 but my cpa use my ssn since it’s a llc on my personal taxes instead of my businesses EINs where I find the wages or begin to start to receive the ERC tax credit on both of my businesses it’s kind of hard for me to follow along I’ve watched 3 of your videos and do not know where to begin with this process requested ppp loan was 13,245.00 amount spent on payroll $8,602.75 covered period was from 4/16/21-06/18/21 so how do I apply and what year should I print out for the 941
I'm a little confused about how your CPA could use a SSN instead of an EIN. When running payroll, SSNs aren't allowed and you must enroll for an EIN. I assume you are referring to payroll for other staff, not yourself, correct? Another thing you have to keep in mind is that with 2 businesses, if they are under the exact same ownership, they have to be combined to determine qualified wages, etc, especially if one or more employees worked in both. You might benefit from a consultation with my employee as your situation doesn't sound straightforward. If interested, you can contact my company to start the process. Consultations are $250.
In my calculation for the credit, do I take out the 6.2% for social security wages and 1.5% for the medicare wages, then base my 50 or 70% off that reduction? Thanks so much for this tutorial!
No, the 6.2% and 1.45% calculations are only to determine the "non-refundable" portion of the credit, but you still get this amount of the credit as long as all taxes were paid. Your qualified wages are used to determine the total ERTC. What is removed from gross wages to determine qualified includes majority owners and related individuals, amounts used for PPP forgiveness, amounts used for qualified sick/family leave or any other federal credits such as the work opportunity credit, and amounts over the $10,000 limit. Subtract the non-refundable portion from the full ERTC to find your refundable portion (or if total ERTC is less than the non-refundable portion, the refundable amount is zero).
You're awesome. This helped me so much. Thank you.
You are welcome!
Great video! Really good instructions. But I’m still a bit confused. Line 18a on 941X is asking for NON-refundable credit. So since that amount is deducted on the worksheet and would would’ve been on the 941 , line 11c, why is it being added to the refund amount on the 941x ? Why isn’t the $630.16 being deducted from your refund since its a nonrefundable credt. How can you get credit for line18a when it clearly states that it’s non refundable? Thx!
The IRS calls it non-refundable, but you do get the full ERTC credit you calculate which is split into non-refundable and refundable. I don't know why they use that wording. But the non-refundable portion is the amount of your original employer tax liability on the 941. When you get your refund, the IRS will call this part a reduction of tax liability. The refundable portion will be specified as a credit. But you do get the non-refundable portion as well in your refund.
I also just released another podcast episode specifically dealing with questions on the ERTC. You can watch that episode at th-cam.com/video/f-1flFx6g3E/w-d-xo.html or listen on multiple podcast platforms.
@@CandyMesser thank you immensely for taking your valuable time to respond to me! Yes that language (ie NONrefundable) definitely had me thoroughly convinced that line 18a should be deducted from the refund or else the IRS would deny our refunds for that over calculation of the refund payment. I racked my brain for 3.5 hours trying to “fix” line 18a because the program i am using kept on calculating line 18a into our total refund amount no matter what i did to try to have it to deduct it. I even sent the software company an email last night laminating how they need to fix the glitch in line 18a because it should be deducting and not adding the “non refundable” credit. Now (if they respond) they are gonna think I’m crazy lol. I even decided not use the program and do it manually so I could manually deduct line 18a from our refund. Thanks for saving our $4100 that i was absolutely sure needed to be deducted from the refund. Again thank you so much for thoroughly explaining this because it was the only hold up with me completing our returns. Also, i about to subscribe to your channel and check out the other video you shared. Gosh Thank u, Thank u, Thank u☺️!
@@kteam4u You are welcome! I wasn't aware there was software out there to do the work. We've been doing all the filings for clients manually. 🙂And yes, please subscribe. Thank you!
Candy, by using the 941 info, you are including the owner salary?
If you mean to calculate the non-refundable portion of the ERTC on the worksheet, you use the wages originally reported on the 941. If an owner is included in that aount, then yes. You must use the wages reported on line 5 of the 941 for the quarter in section 1. However, if wages of a majority owner and/or related individuals are included in the figure on line 5, you would remove that amount to determine qualified wages for ERTC.
Good afternoon, thanks for the video, I have a question, if I did not know about the credit and I presented and made the payments of the 941 for the first, second and third quarters of 2021, can I present a 941x for each quarter of 2021 and receive a refund for those quarters filed?
Yes, if you qualify for each quarter, you can file a 941-X for each to claim the credit.
@@CandyMesser Thanks a lot for the information.
@@sergiosdrr24pr19 You are welcome!
Dear Candy, Can I claim ERC for Quarter 4 in 2019? Thanks so much for your helpful video. If I had received PPP Loan in this Quarter. And How can I calculate for this Quarter? Can you show me? God bless you!!!
No, ERTC didn't begin until 2nd QTR 2020 (plus March 13-31 wages). And PPP also didn't start until 2020, so nothing can be claimed for 2019.
@@CandyMesser Thanks for your prompt reply. Nice day!
@@CandyMesser Hi Candy, Can You show me how to claim ERC with PPP fund ? And If any quart has PPP, I will not claim anymore. How to calculate? Thank you.
@@dungchi5688 Thanks. I hope yours was great as well!
@@dungchi5688 I created a how-to video to show one example of a client we did for their PPP and ERTC. See if this helps. th-cam.com/video/ExVnqFEnOa4/w-d-xo.html If you still need assistance, you can e-mail my office at contact@abandp.com. But because it is a bit time-consuming and every case is different, we do charge a fee to do this work. We can give you the fee once we know how many were on payroll during the 2nd/3rd/4th QTRs 2020 (or 2021 if you claimed in that year).
If you are filing for Q3 2021 ERC only and using the 941x form, and you have "Nonrefundable portion of credit for qualified sick and family leave wages for leave taken
after March 31, 2021" on your original Q3 941, line 11d, do you have to complete Worksheet 3. "Adjusted Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021"? Or is Worksheet 3. only if you are making corrections to the Qualified Sick and Family Leave credit??
The worksheet is only to determine credits to claim. For instance, if someone qualified for it but failed to claim it originally on the 941, they would use it to claim the credit. If you are filing for the ERTC, you must reduce qualified wages by the amount of the wages you used to claim the credit for the sick and family leave.
For wages that are paid in October, 2021 for payroll periods that ended September 30, 2021, would those go on the 4th quarter 941 even though the business is not a start-up. In other words, can a non start up claim these wages in an otherwise ineligible quarter because they were earned in a qualifying quarter?
No, payroll is based on date paid, not earned. So just like wages earned the end of 2nd quarter were included in the 3rd quarter, end of 1st included in 2nd, etc, you can only claim wages paid in the quarter for that quarter's ERTC. If you are not a recovery startup business, you can't claim 4th quarter 2021.
When calculating qualified wages, do you use net pay? If so, my employees make tips. I seen those are qualified, how do I include tips in qualified wages?
No, you use gross wages, not net. You can included tips in the total gross.
Candy thank you for the video. I own 3 companies. Can you discuss how the Aggregated group process is determined? From my understanding If one of entities was fully or partially suspended they all qualify.
Hi Chad, I don't know your situation enough to say how this would apply to you. But just because you own 3 companies doesn't mean they would be aggregated. According to the FAQs regarding aggregation:
Under the section 52 rules, corporate taxpayers may be required to aggregate as a parent-subsidiary controlled group, a brother-sister controlled group, or a combined group of corporations. Section 52(a) of the Code describes a parent-subsidiary controlled group of corporations, generally, as one or more chains of corporations where the common parent corporation owns more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the value of all classes of stock of each corporation. A brother-sister controlled group of corporations, generally, is two or more corporations where: (1) five or fewer persons who are individuals, estates, or trusts own at least 80 percent of the total combined voting power of all classes of stock entitled to vote, or the total value of shares of all classes of stock of each corporation; and (2) the same five or fewer persons, taking into account ownership only to the extent that it is identical with respect to each corporation, own more than 50 percent of the total voting power of all classes of stock entitled to vote, or total value of shares of all classes of stock of each corporation. A combined group of corporations is three or more corporations, each of which is a member of either a parent-subsidiary or a brother-sister controlled group, and at least one of which is both the common parent of a parent-subsidiary controlled group and also a member of a brother-sister controlled group.
The section 52(b) aggregation rules apply to partnerships, trusts, estates, or sole proprietorships in trades or businesses under common control. Under this rule, entities are considered a single employer if they are under common control applying rules similar to the parent-subsidiary or brother-sister controlled group rules or the rules for a combined group of corporations.
Under section 414(m) of the Code, an "affiliated service group" is treated as a single employer based on rules related to the performance of services by one entity for another or by one entity in association with another for third parties, even if the entity does not have sufficient ownership or control of the other entity to form a controlled group.
Members of an affiliated service group under section 414(m) of the Code, or otherwise aggregated under section 414(o) of the Code are considered a single employer for purposes of the application of the Employee Retention Credit rules. As a result, these employers must be aggregated for purposes of the following rules applicable to the Employee Retention Credit:
1. Determining whether the employer has a trade or business operation that was fully or partially suspended due to orders related to COVID-19 from an appropriate governmental authority.
2. Determining whether the employer has a significant decline in gross receipts.
3. Determining whether the employer has more than 100 full-time employees.
If applicable to you, the amount of the Employee Retention Credit must be apportioned among members of the aggregated group on the basis of each member's proportionate share of the qualified wages giving rise to the credit.
That was a lot of info. In summary, if under the ownership rules, you must aggregate, then, yes, all can be considered affected by the government mandate and you would have to determine the amount each qualifies for. I have not had a case where I have had to do this for a client.
Thank you for all the great info! I have one ques. If filing the initial Q3 return, Do I file the 941x as my ORIGINAL return even though I have not submitted the 941 for Q3? I'm confused because it would technically not be "correcting" a return as the 941 has not been filed.
No, you can't file a 941-X as an original filing. It's always correcting a return already filed. If you are claiming it for 3rd QTR 2021, you should have your payroll company include it on the 3rd QTR 941 (although it may already be filed). If already filed, you will then have to do a 941-X to claim it. If you do your own payroll and file your returns, you add the information on the 941 to claim the ERTC credit for the quarter.
Once I send 941x in how do I know if I computed correctly? Does IRS check for me, or send me confirmation letter?
If there are mistakes, the IRS will send it back to you to correct. It's better to confirm now than wait for a notice, submit again and then wait the 6-8 months of processing time to get the refund. We do offer a review if you want a professional to check your information. You can reach out to us at contact@abandp.com, let us know how many quarters you need to file and want reviewed, and we can give you the fee.
1)How did you get the qualified wage amount? All of my employees made under 10000 for the year for 2020 and 2021.
2) How do you calculate the portion for march of 2020?
Each case we do is different. But we had to know if the client had a PPP loan. If so, what was the covered period? Then, we have to determine what wages were needed for PPP and how could that be spread over quarters in the covered period to maximize ERTC and PPP forgiveness. If no PPP, we started with 2nd QTR (anyone who qualified generally qualified at least for 2nd QTR 2020). We'd look at gross wages for each employee and make sure no credits for qualified sick pay were included. If they didn't have $10,000 gross in the quarter, we pulled wages for March 13-31 and added to 2nd QTR for the ERTC claim. If they still didn't meet the $10,000 per employee and they qualified in another quarter, we'd use the wages in that period. If they still didn't have $10,000 for the year and qualified in 4th QTR, we'd file that return as well. 2021 is a bit easier since it's $10,000 max per quarter, not year.
Thank you again for your help and posting this video. One question, two parts - In part 4, I notice that you did not check box 41 or box 42. Should these be left blank per the video? If not, which box should be checked for the ERC?
My video has the 941-X that only goes up to line 37, so I assume you are looking at the newly released 941-X from July 2021, and your question about lines 41 or 42 is if you have under-reported and over-reported amounts on the same form, and reclassifying workers. If you are only claiming the ERTC, these do not apply.
Thank you, again!
@@Kstoehrable You are welcome!
Hello, These videos have been helpful but I have a question. I just found out about this credit and am trying to go back and file for 2Q 2020 - 3Q 202, for 2020 should I do a 941-x for each quarter separately ? Thank you
Yes, you must calculate and apply for the ERTC for each quarter separately.
thanks so much for uploading this video, I have question would like to ask, if the company have two partners owe 50% for each and the wage for these 2 owner can use for wage to apply ERTC?? I know majority owe more than 50% wage can not be used for ERTC but I am confusing for majority own 50%, Appreciate for your reply
According to the information I saw from the IRS, it specifies a majority owner which would be greater than 50% ownership. If you and your partner each own 50%, that is not majority ownership and the wages should qualify. However, it must have been paid through payroll (therefore some type of entity), not a partnership with draws paid to each partner.
@@CandyMesser You are a lifesaver! Thank you for all these Q&As and the videos! Regarding your response above, our LLC has at least 4 owners with only one above 10% ownership that were paid thru payroll to cover health deductions but no taxes as they each receive K1s. Because of this, I'm assuming we would NOT include their wages unless our payroll servicer included the their wages on the reported 941. Correct, or no?
@@cathyhull4861 If they had wages on the 941 and are not majority owners, they can be included. If they were not on the 941, they can not be included. If the payroll is only to reflect healthcare paid by the company for them and is not truly wages, it would not be included. For instance, if the LLC is taxed as an S-Corp and the owners' W2s show payments under the 2% or greater shareholder healthcare received, these amounts are not wages. But the company can claim this portion under the employer-paid healthcare expense on the 941-X.
The other issue I have is putting the Mar 13-31 2020 on 2Q 941x, Don't know where to add the social security for that time. All second Q don't qualify due to PPP
You don't include the Social Security wages for March on the 2nd QTR return. You only put the amount from the originally filed 2nd QTR 2020 941. Even if you can only claim March wages for ERTC, you will use the original 2nd QTR Social Security wages since the March credit is claimed on the 2nd QTR 941-X.
@@CandyMesser Ok, I don't have anything ertc available for second Q but do for Mar 13-31. I thought that I would put that amount in Pt 3 line 33a (941X) to add that amount for a credit. but that I cannot find where to put the SS portion . Are you saying you can get credit for the wages but not for the social security on those wages?
@@janetdwyer2781 You don't get credit for Social Security, only qualified wages. You use the Social Security wages from the original 941 for the quarter to determine the non-refundable portion of the ERTC. Take the total ERTC less the non-refundable portion to get the refundable portion. But I assume since you only have wages for March that the non-refundable will be greater than the ERTC which means your total refundable is zero. I'm not sure why the IRS calls it "non-refundable" as you still can claim the credit. Also, why do you not have wages for 2nd QTR? Did you use an 8-week covered period for PPP and not use the 40% non-payroll expenses toward forgiveness? If so, that would make sense. But if you used a 24-week covered period, you should be able to claim wages in the 2nd QTR for ERTC by spreading the wages needed through different quarters for PPP. Many of my clients didn't claim any PPP wages until the 3rd QTR allowing them to claim ERTC in the 2nd QTR.
Hi there, I've watched your videos which have been very helpful, and have a formatting error question for you. I mailed out my 941-Xs today but after the fact I realized I did not input the numbers to the right of the decimal in the second column for each line item; I entered the whole and decimal amount to the left but of course included the decimal (I copy and pasted from excel).
Should I be concerned the IRS will reject based on formatting?
I think it will be fine. If for some reason a computer is trying to read it and can't, hopefully, a human will process it for you. But I don't know for sure. This is something they don't give an answer for.
do you use the revised 941X for the first and second quarters of 2021?
I assume no and use the older version.
You can use the revised 941-X for 1st and 2nd QTRS, but it was revised in July 2021 due to the update to how to calculate the ERTC as of July 1, 2021. So you can use either as long as you can properly account for all line items needed to claim the credit.
Oh dear, I am sure Inreading a recent IRS FAQ that there is an alternate quarter election allowed - eg if one quarter qualified for ERTC (say q2 2021) but the next quarter did not, say Q3…that a business could use the preceding alternate quarters outcomes as a qualifier. In this example, we would use the q2 outcome to qualify for q3. I think this was called the alternate quarter qualification…did I get that wrong?
You may not use prior quarters to determine eligibility for the next quarter in 2020. However, the IRS did say for 2021 that you could use the current quarter in which you want to file, or the prior quarter to see if you qualify for ERTC (you wouldn't have known if you would qualify until the end of the quarter, but you would have been paying payroll taxes rather than reducing them by the expected credit.) So for 1st quarter 2021, you could look back to the 4th of 2020 and compare to the 4th quarter of 2019 to see if you qualify. 2nd quarter can look back at the first, and so on.
Thank you so much for this video! QUESTION: Worksheet 4 - Line 2h states enter the smaller 2d or 2g - well if 2d is the smaller then 2h is the same and the the refundable portion is ZERO line 2i. Is that Correct?
Yes, you can have a zero refundable portion of the credit. That doesn't mean, however, that you don't get the ERTC. It's just that the IRS splits "refundable" and "non-refundable" for the calculation. You will still have the calculated ERTC to claim.
Hi Candy, If a company used wages from Feb & March 2021 for loan forgiveness- can they still claim ERTC for January 2021 for the first quarter?
Yes. The main thing is you can't use the same wages for both ERTC and PPP. But if wages used for PPP began with Feb 2021, you can use January for ERTC (as long as they are qualified - no majority owner or related individuals on payroll, no other credits received such as opportunity zones or paid family/sick leave).
Very helpful! Thank you.
I'm glad!
Hi Candy I am a recovery startup. I began paying wages July 13, 202. I do my own payroll in house with Wave. When do i file my 941 if I am seeking an advance. I was told I didn't file the 941 first if i was asking for an advance
941 returns are always due month after quarter-end. I'm not sure why you were told not to file that on time. If you mean the 941-X, you can claim the 3rd quarter on the 941 if you haven't already filed. If you meant to ask when to file the 941-X and not the 941, you can file that now too. I'm not sure what you mean by advance. I think you may still mean the ERTC. If not, please give me more information so I can answer the question for you.
If a business recently closed in 2022 but was still open during the pandemic (2019 to 2022) can they still receive and file for erc credit?
Yes. You qualify based on the fact that you were affected by the pandemic for the period the credit is available.
Candy, once a 941x is submitted for the ERC, can you change an error, and if so how would I make this correction> I used line 18c when it should have been 18a?
Hi Beverley, what you will do is fill out another 941-X. Fill in the first part of page 1 with your info, the quarter, year, etc, and be sure to put the info on the top of every page as well. You will only fill in lines 18a and 18c for calculations. You will put the correct amount on line 18a column 1. Zero in column 2. The correct amount in column 3, then the correct amount as a negative number in column 4. On line 18a, you will put Zero in column 1, the amount you put in column 2, the amount in column 2 as a negative in column 3 and positive in column 4. Your numbers in column 4 should be the same except that one is positive and one is negative. On lines 23 and 27, put zero. In the explanation, state that you entered the non-refundable portion of the ERTC on the wrong line, and you are submitting the 941-X to correct it. Be sure to sign in section 5.
@@CandyMesser Thanks so much!
@@beverleykatic3991 you are welcome!
Hi Candy: Thank you VERY much for this video (and the older one about earlier quarters). This is very helpful about the 941X. One quick question: how does form 7200 come into the picture? Do we need to submit 7200 for each quarter, along with the 941X? Thank you again for sharing your expertise so generously.
No, you only used form 7200 if you were claiming credits for that quarter in that quarter and had more credit available than you were using for taxes due. If you are filing for prior quarters, you only need to mail in the 941-X forms for each quarter in which you qualify.
@@CandyMesser Thank you!
@@jasoninnes You are welcome!
I am not sure about this form. But it is my understanding that the Maximum Credit for employee is $7000 for quarter? is that right?
For 2020, the maximum credit for the year is $5000 per employee. For 2021, it is $7000 per quarter.
Thanks for this great video explaining the ERTC filing. Question?-we filed 941-x 2020 in February 2021 and still have not received refund from IRS-have you how heard anything on this?
Yes, the IRS is very far behind and said it can take 6 months to process. Sounds like you are right at that point. I would assume you'd get your refund soon. I just had one person tell me she received hers last week.
@@CandyMesser Thanks
@@joelrainey2629 You are welcome!
Hi Joel, I filled in March and haven’t received a refund as well.
@@Granda2012 Hopefully you will receive yours soon. But the IRS stating they are up to 6 months behind sounds like was not quite accurate as you should have had it by September if that was the case.
Hi Candy,
May I have a copy of the 941x worksheet for ERTC? thanks
I can't attach anything here. If you e-mail my office, my admin will send it to you. contact@abandp.com. Let them know which periods you plan to file as the IRS has changed the worksheet a few times. If only 2020, we can send that one to you. If filing through 2nd QTR 2021, we can send the one where you have to determine the correct percentage to use for 2020 or 2021, but the worksheet shows both. If you are going to file for the 3rd QTR 2021, we have to send a different one as the figure used to calculate the non-refundable portion of the credit is now different.
WHY ARE YOU DOING X NOW? I never did original. Please elaborate.
Sorry, for some reason I never saw the notification of your comment until now. If you never filed the original, you should watch the video I did on that situation showing how to claim the credit on the original return. You can find that one at th-cam.com/video/CqQv3A6x2FE/w-d-xo.html
Hello, do you help business filling these documents?
Yes, we do. We charge $500 per return if the qualified wages are calculated by you and submitted to us with all the other necessary paperwork. If you need us to assist with the calculation for qualified wages, there is an extra fee and we need to know if you had a PPP loan, etc. You can e-mail us at contact@abandp.com and we can give all the details.
Candy, I could not agree more with all of the other comments praising you. Easy to follow, to the point, great explanation. One question, if some of the payroll from a particular quarter was used to get PPP loan forgiveness, should you simply reduce the amount of qualified wages by the amount of payroll $'s applied to loan forgiveness? Thank you so much for your consideration.
Hi Soma, it's a little more complicated of an answer than a yes or no and depends on a few things. Are there wages that don't qualify for ERTC (over the 10K max, majority owner and/or related family, FFCRA sick/family leave wages, etc)? If so, use those wages towards PPP. But if all wages are ERTC qualified, you would reduce that by the amount of the required payroll for PPP. But remember, you can use non-wage payroll for PPP as well (employer health care expense, worker's compensation premiums, state employer taxes, etc). Reserve as much as you can for ERTC.
thanks for the video but i have a question…since we’re all going to file 3/Q/2021 starting next month 10/1, can we just claim the ERTC on the F941 instead of file the amended 941x afterwards …? i wonder if we can claim the ERTC on F941 on 3Q n 4Q then why we need to file amended F941x afterwards or do we have to file amended to claim the ERTC for 3Q n 4Q…? i m just kind of puzzle about it …🤔
Yes. My video will be for those who missed filing on the original return (didn't tell their payroll company they qualified, or they didn't know how to do it themselves). Filing on the original 941-X is the best option. :-)
I also know some people who had the 2nd draw PPP and the 24 week period ends towards the end of October. They are waiting to see the total allowable expenses they incur so they can reserve as much as possible for ERTC using only the minimum amount required (along with other payroll expenses) to meet the 60% of the loan amount to be payroll related. If they file for ERTC before they can calculate the PPP wages needed, they may take too much for ERTC.
@@CandyMesser thanks for ur prompt reply ….i m very appreciate ur help. So that means i can also claim the ERTC on the original F941 instead of filing the amended afterwards if i didn’t get PPP loan after 6/30/2021… s that right ..? bc i think it will be saving more time to me if for sure no PPP covered after 6/30/2021 then no need to file the amended n can directly report n claim the ERTC on the F941 ….do u degree ..?
@@paulinechan9971 yes, you can have the ERTC credit put onto the 941-X for 3rd quarter so you don't have to do an amended return. If you had a PPP loan in 2021, you just want to make sure you save enough wages for full forgiveness. If you used more wages earlier in the year toward PPP and received forgiveness and can use all of 3rd quarter wages for ERTC, you won't have to reduce the qualified wages for the 3rd quarter ERTC calculation.
@@CandyMesser again thx for ur prompt reply …😆 so u mean can have the ERTC put on F941 for 3Q not on F941x…n make sure the ppp loan calculation not overlapped the wages in 3Q ….right ? thx for ur reminding . 🙂
what numbers were on the 941 that was filed? Without this information, it is impossible to completely understand the process.
i researched this and my own answer is to use the qualified wages as calculated.
I'm not sure I understand your question. Can you clarify?