Woman smiling with mask pulled down

5 Reasons Dentists Should Claim the Employee Retention Credit (ERC)

Reading Time: 5

Discover the Benefits of the ERC for Dentists

When the COVID-19 crisis shut down businesses across the U.S., significantly impacting the economy across industries, dental practices were hit especially hard. Mandatory office closures, distance requirements and the face-to-face transmissibility of the coronavirus—as well as the general public’s wariness—meant dental practices were partially or fully closed and suffered financially.

The American Dental Association’s (ADA) Health Policy Institute (HPI) surveyed more than 19,000 dentists to track how they handled the pandemic. They found that 76% of those surveyed had closed their offices to all but the most critical emergency patients and 19% had fully closed. And US News & World Report, when they analyzed patient volumes, found that they were down by up to 79% at the beginning of the closures and 27% by the time state bans were lifted.

To help small businesses and practices like yours keep the lights on and continue to pay employees during this challenging time, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act — one of the largest stimulus packages ever. The CARES Act includes financial relief benefits for business owners that remained committed to their staff and community during the pandemic. One such benefit is the Employee Retention Credit (ERC), a payroll tax credit from the government that can be worth thousands or even millions in tax refunds. 

You can still claim the ERC in 2023, and your business does not have to be struggling today to qualify. In this blog, we will explain the many benefits of the ERC for dentists and dental practices.

Is the Employee Retention Credit for Dentists? 

Yes! Most dentists are eligible for the ERC credit if they paid employees in 2020 or 2021. Unfortunately, many organizations that qualify for this potentially valuable payroll tax credit didn’t initially claim it on their 2020 and 2021 payroll tax filings. They may not have believed they qualified or felt they were ineligible because they received a Paycheck Protection Program (PPP) loan. The good news is that the funds are still available. Here are five reasons your dental practice should apply now for the Employee Retention Credit.

erc for dentists eligible for ertc dental practice
Most dentists are likely to qualify for the Employee Retention Tax Credit if they lost revenue during the pandemic or were forced to modify routine operations to comply with COVID-related government orders, such as social distancing or capacity limit mandates.

1. Most Dental Practices May Qualify

There are two ways to qualify for the ERC for dental practices: a significant decline in revenue or if government orders impacted your business. Your dental practice does not have to meet both of the following qualifications — only one or the other.

Revenue Decline

The easiest way to identify if your practice may be eligible is to determine if you experienced lost income in 2020 or 2021. When compared to 2019 revenue, dental practices that experienced a 50% drop in any quarter of 2020 and/or a 20% drop in any of the first three quarters of 2021 may qualify. But if you didn’t lose money, you could still receive the ERC refund based on how your practice was impacted by government mandates.

Government Order Impact

If your dental practice had to close, limit capacity, or modify operations due to local, state or federal government orders, social distancing requirements, or any other pandemic mandates, you likely qualify. 

This could include any of the following:

  • Procedures were suspended due to government orders
  • Operating hours were affected by curfew or cleaning protocols
  • Social distancing requirements reduced patient visits
2021 erc eligibility requirements qualifications
Does your business qualify for the 2021 ERC?

2. Dentists Could Receive Up to $26,000 Per Employee

When first introduced as part of the CARES Act in 2020, the maximum credit allowable under the ERC was $5,000 per employee. With its renewal and expansion under the Consolidated Appropriations Act (CAA) in 2021, the maximum credit increased to $21,000. This new potential refund made the ERC for dentists far more attractive.

How much money can you get back for the Ertc?
Eligible dental practices could receive a payroll tax refund of up to $26,000 per employee through the Employee Retention Tax Credit.

The ERC refund could be quite significant for your dental practice. Use our ERC refund calculator to get an estimate of your potential ERC refund amount based on your number of employees. Most practices will find that they qualify for a significant windfall refund.

3. The ERC for Dentists is Retroactive

Dentists can still claim the ERC today in 2023. Though 2021’s Infrastructure Investment and Jobs Act (IIJA) effectively repealed the ERC program for the fourth quarter of 2021, dental practices are still allowed to amend their payroll tax filings (submit IRS Form 941-X) for the covered periods in 2020 and 2021. Eligible practices claiming the ERC will receive a refund check from the government for the amount calculated and claimed. Don’t miss your chance to claim your piece of the $2.4 trillion pie!

4. Dental Practices Could Get a Cash Refund

The ERC for dentists began as a federal credit calculated based on a practice’s quarterly payroll taxes (not the practices’ income taxes), with the refund amount determined by how many W-2 employees the company retained during the eligibility period. Though the ERC has ended, your practice can still benefit from it. Once your claim has been filed and is verified and processed by the government, a refund check will be issued, providing a welcome cash infusion as your practice faces a challenging economic landscape.

5. Claiming ERC Doesn’t Have to Be Like Pulling Teeth

The process for claiming your ERC refund begins with determining whether you qualify. Then, working with your CPA or tax preparer, you need to file amended payroll tax forms for 2020 and/or 2021 and submit them to the government for your refund.

Or you could make it easier on your practice and partner with a company that specializes in claiming the ERC for dentists, like Omega Accounting Solutions. Our specially-trained ERC experts can determine if your company may be eligible with just a 10-minute call. They can also handle the entire filing process for you. If you need financial support right away and can’t afford to wait 6 to 12 months for IRS processing, Omega Funding Solutions can provide a bridge loan based on your expected ERC refund. Contact Omega to get started today.