Does Delaware Tax ERC Federal Credit?

Key Takeaways

• The ERC is considered taxable income at the state level in Delaware, and businesses must report it when filing state taxes.
• Eligible employers may still claim the ERC retroactively by filing amended returns for 2020 and 2021, with deadlines of April 15, 2024, and April 15, 2025, respectively.
• Businesses in Delaware can claim up to $26,000 per employee based on qualified wages during the eligible periods.
• At ERTC Express, we provide expert guidance, helping Delaware businesses handle ERC claims, maximize refunds, and ensure compliance.

 

ERC Basics

The Employee Retention Credit (ERC) is a refundable payroll tax credit introduced as part of the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act to help businesses such as barbershops, hotels, and museums retain employees during the COVID-19 pandemic. The credit was later expanded and by subsequent acts, extended through September 30, 2021.

 

Key Points about the ERC

• It provides a refundable tax credit of up to 70% of qualified wages paid to employees, with a maximum credit of $7,000 per employee for each quarter of 2021.
• Eligible employers include businesses and tax-exempt organizations that experienced a full or partial suspension of operations or a significant decline in gross receipts during the pandemic.
• The credit is claimed against employment taxes and can be retained by the employer.
• While the ERC expired for most businesses on September 30, 2021, eligible employers can still claim the credit retroactively by amending their 2021 tax returns.

 

You still have time to submit the 2021 ERC claims since the deadline is April 15, 2025 (image courtesy of financestrategists.com).

 

How to Claim the ERC

To claim the ERC, eligible employers report qualified wages and health insurance costs on their quarterly employment tax returns, typically using Form 941. They can also retain the employment taxes they would otherwise have to deposit.

 

To claim the credit retroactively, employers must file amended returns for any quarter ending in 2021—no later than April 15, 2025. Consulting with a payroll specialist or tax accountant is recommended for the most up-to-date information and advice on claiming the ERC.

 

While the ERC is not subject to federal taxes, certain states may choose to tax the refunds. Let’s learn if Delaware imposes taxes on the ERC credit.

 

ERTC Express: Maximize Your Employee Retention Credit (ERC)   Secure the maximum ERC refund effortlessly with ERTC Express. Our US-based CPAs specialize in ERTC claims, using a “Power of 3” system to ensure each submission is audit-ready. Typically outperforming standard claims by 40-120%, our client-centric service charges only after you receive your funds, ensuring our goals align with your success. Enjoy dedicated support and significant financial benefits with ERTC Express. Get expert help today!

 

Does Delaware Tax ERC Federal Credit?

Although the ERC is a federal credit that reduces payroll taxes, the state of Delaware does not exempt this credit from state taxation, which is an important consideration for businesses claiming the ERC.

 

The ERC amount received by a business is considered taxable income in Delaware and all businesses must report accordingly when filing their state taxes.

 

Businesses in Delaware that qualify for the federal ERC can claim up to $26,000 per employee based on the wages paid during the eligible periods.

 

Choose ERTC Express for Your ERC Filing

At ERTC Express, we specialize in helping Delaware businesses make the most of their ERC claim process.

 

We use our “Power of 3” approach – three CPA teams who meticulously cross-check each claim.

 

Key Services Offered by ERTC Express

• Eligibility Assessment: We evaluate whether a business qualifies for the ERC based on its revenue decline or operational disruptions due to the pandemic.
• Credit Calculation: We accurately calculate the potential ERC amount by identifying qualified wages and health plan expenses, so businesses claim the maximum refund to which they are entitled.
• Documentation Support: We assist in gathering and organizing the documentation required for filing.
• Filing Assistance: We also guide business owners through the process of filing amended payroll tax returns (Form 941-X) to claim the ERC retroactively.
• Audit Defense: We provide audit support, ensuring that claims are defensible against potential IRS audits.
• No Upfront Fees: We operate on a contingency basis, meaning there are no upfront fees; businesses only pay once they receive their ERC refund.
• Quick Process: Our process is designed to be efficient; business owners only need 15 minutes to get started.

 

We help Delaware business owners maximize their tax credits, maintain audit compliance, and receive the funds they need for business growth.

 

Contact ERTC Express

 

Frequently Asked Questions (FAQ)

 

What is the Employee Retention Credit (ERC)?

The ERC is a refundable tax credit designed to encourage businesses to retain employees during the COVID-19 pandemic. Eligible employers can claim up to $26,000 per employee based on qualified wages paid during specific periods in 2020 and 2021.

 

Does Delaware tax the Employee Retention Credit (ERC)?

Yes, Delaware taxes the ERC at the state level. While the ERC is a federal refundable tax credit, the amount received is considered taxable income for Delaware state tax purposes.

 

How can ERTC Express assist Delaware business owners with claiming the ERC?

At ERTC Express, we help Delaware business owners by assessing eligibility, calculating potential credits, providing documentation support, and guiding them through the filing process to maximize their refunds while ensuring compliance with IRS regulations.

 

What is the deadline for claiming the ERC for 2020?

The deadline to claim the ERC for the 2021 tax year is April 15, 2025. Businesses must file an amended return using Form 941-X to claim the credit for eligible wages paid during that year.