Can I apply the employee retention tax credit retroactively to past payroll periods?

Hello there, jinah,

The employee retention credit is not retroactively applied. You'll want to delete and recreate the paycheck with the new tax deferment options applied.

Check this article how: Delete or void paychecks. If you no longer have the option to delete the paycheck I recommend reaching out to our QuickBooks support, we'll be able to help you with that.

The Employee Retention Credit is a fully refundable tax credit for employers equal to 50 percent of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees. This applies to qualified wages paid after March 12, 2020, and before January 1, 2021.

You may claim the Employee Retention Credit for qualified wages that they pay after March 12, 2020, and before January 1, 2021. Therefore, an Eligible Employer may be able to claim the credit for qualified wages paid as early as March 13, 2020.

Check out these article for more reference:

• What you need to know about the Families First Coronavirus Response Act.
• FAQs: Employee Retention Credit under the CARES Act.

I'll be here if you have other questions.

Will this work for paychecks from last quarter for which I already filed the Form 941? The Employee Retention Tax Credit went into effect on March 12, so it included our last payroll of Q1.

Thanks for getting back to us, drpeters.

Yes, this will work and should be applied to your previous payroll. Our QuickBooks Online Payroll Team will take care of this for you. Hence, you'll want to call or chat us through the steps outlined below:

1. Sign in to your QuickBooks Online company.
2. Go to Help (?).
3. Select Contact Us.
4. Enter your concern, then select Let's talk.
5. Choose Start a chat to connect with us with a support expert.

In case there are any adjustments or corrections, you'll want to amend your 941 returns. For a list of items that can be corrected with specific instructions, see Instructions for Form 941-X.

Stay in touch by commenting below. Just tag my name and I'm glad to help. 

Thank you and stay safe!

Thanks for your reply, MaryLandT. I'm sorry I didn't specify - I used Quickbooks Desktop with Enhanced Payroll.

As far as the first quarter 941 form, the IRS says the credit should not be claimed on that:

https://www.irs.gov/forms-pubs/employee-retention-credit-for-employers-subject-to-closure-due-to-cov...

So somehow, that amount from March needs to be incorporated into the Q2 941 form.

Hello there, @drpeters.

I recommend that you call into our Desktop Support. Rest assured, they have the tools that can help you correct the Employee Retention Tax Credit to the proper Quarter. Here's how to get in touch:

1. Open QuickBooks.
2. Go to Help, then QuickBooks Desktop Help.
3. Select Contact Us.
4. Give a brief description of your issue, then hit Continue.
5. Choose Start Messaging or Start a chat.

You'll hear from an agent shortly.

Let me know how the conversation goes. I'll be here if you need anything else. Have a safe week ahead!

Hi, @Ashley H . I just spent nearly 2 hours on chat, and the agent could not help at all. After all that time, he linked back to this forum post (the link for which I had sent him at the very beginning).

Very frustrated. I will try to work this out myself - hopefully it doesn't screw things up too badly.

We don't want you to feel this inconvenience, @drpeters. Please know that helping you is our top priority. And I'd like to redirect you to the best support available so this gets addressed right away.

With regard to any payroll adjustments or corrections, we'd highly recommend contacting our Phone Support Team again. I understand that you've already contacted them before, but they're the best support group to handle your concern about correcting your previous payroll.

To reach them, you can follow the steps shared by my colleague Ashley H above.

Just in case you'll receive a notice of discrepancy from either the Internal Revenue Service (IRS) or a state tax agency, feel free to read this article to learn how to handle it: Notice of Discrepancy.

Please know you can continue to reach me here with any additional questions. I'm always happy to help. Have a great day and keep safe.

I just ventured out on my own - hopefully correctly! My process:

1. I voided the paychecks I wanted to change (they were Direct Deposit, so I could not delete them).
2. I recreated the paychecks as paper checks using Step 4 under "QuickBooks Desktop Payroll" in this article: https://quickbooks.intuit.com/learn-support/en-us/help-articles/how-to-set-up-and-track-the-employee.... I did not print the checks (since the money was already in the employees' bank accounts).
3. Thankfully, the amount of the checks came out the same, so I just deleted the Liability Check to QuickBooks Payroll Service that was automatically generated when I deleted the original paycheck.
4. I transmitted the payroll data to QuickBooks payroll service.
5. When I do my monthly 941 federal liability payment for April 2020, I will deduct the amount in the CARES Expense account. This includes the last paycheck from March.

I believe that should take care of it. If any of this seems wildly off-base, please let me know!

Appreciate the response! I had also spent two hours on the phone with a representative, who seemed to have no idea what the tax credit even was. The credit is based on the hours worked and unfortunately cannot account for paycheck tips or other types of wages. They’ll have to update the system accordingly. 

@drpeters   I've read your process for reentering processed payrolls for the ERC.  I have some questions hopefully you can answer regarding the Direct Deposit paychecks.   I have 5 weeks of payroll to correct. 

1) Voiding a DD check prompts sending the information to Intuit to remove the money from the employees     account.  How did you handle this?

2) Why did you recreate as a paper check? 

I'd like to share some information, DKHARTSOUGH.

If the paychecks you are trying to correct has been offloaded, voiding them is unavailable. You'll want to reach out to our Customer Care Team for further assistance: 

Here are the steps:

1. Go to Help > QuickBooks Desktop Help.
2. In the Have a Question window, click the Contact Us link at the bottom.
3. From the Contact Us page, select any topics.
4. Under Here's how to connect with a QuickBooks expert section, click the Get Phone Number or Start a Message button.

Otherwise, check out this article if the payroll has not yet been sent: Void a pay check. Before doing so, please make sure to create a back up copy of your company file. You can follow the instructions here: Back up your QuickBooks Desktop company file.

For any additional questions or concerns, please add a comment on this thread. Take care and stay safe.

Thank you.  I'll try Contact Us option.   

@DKHARTSOUGH , here are the answers to your questions, in case tech support can't assist you.

1) go ahead and send the info to Intuit - it doesn't affect anything. You may get a notification that they cannot recover the money, since it was direct deposited into the employees' accounts. That's OK - you don't need to get the actual money back. Which leads to...

2) I recreated the paychecks as paper checks using the retention credit instructions, but did not print them out or give them to employees. Those were just the replacement records for the voided direct deposits. 

End result? Employees still have their money. Everything is still recorded correctly in QB.

@drpeters   Thank you for responding to my question.  I did talk to support and had a very helpful tech support person - Sarah Jane Almendras.  Cheers to her.   She told me same as you did.  Was glad to hear it from you since you had actual experience doing this.    I was having anxiety issues over sending voided check info to Intuit.   Trusting what you and Sarah both have said - it will not affect employees bank accounts.

Just wish the Employee Retention Credit info had been available before checks had to be issued.  Oh well....

Be safe. Stay healthy.