Got PPP round 1 funding, can my business also qualify for ERC tax credits?

So my small business was lucky enough to receive the first round of PPP funding back in 2020. We're a local restaurant that was completely shut down for about 4-5 weeks during the early pandemic restrictions. I've been going through our financials lately and wondering about that Employee Retention Credit (ERC) that I keep hearing about. I'm getting totally conflicting information everywhere I look! Some tax sites say you absolutely cannot claim both PPP and ERC for the same period, while others are saying you definitely can as long as you don't use the same wages for both programs? I'm super confused about this. We really struggled during those shutdown weeks, and even after reopening we were at reduced capacity for months. If we qualify for ERC too, that would be a huge help for our still-recovering business. Has anyone successfully claimed ERC after getting PPP? What documentation would I need to provide?

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18 comments

Liam O'Reilly

•8M

You can actually claim both PPP and ERC, but you're right that there's a key restriction - you can't use the same wages for both programs. This is called "double-dipping" and isn't allowed. For your situation, since you received PPP round 1 and were fully shut down for 4-5 weeks in 2020, you likely qualify for ERC. The shutdown period alone would make you eligible under the "full or partial suspension of operations" test for 2020. For 2020 specifically, you needed either that suspension OR a 50% reduction in quarterly gross receipts compared to the same quarter in 2019. Here's how to approach this: First, identify which wages you used for PPP forgiveness. Then, use your remaining eligible wages for ERC calculations. For example, if you had $100,000 in qualified wages but only used $70,000 for PPP forgiveness, you could potentially use the remaining $30,000 for ERC.

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Liam O'Reilly

•8M

You can still claim ERC retroactively by filing an amended quarterly employment tax return (Form 941-X) for the relevant quarters. For 2020 quarters, you generally have three years from the date you filed the original return to submit an amendment. So for most 2020 quarterly returns, you'd have until 2023-2024 depending on when you filed. Regarding audit concerns, claiming ERC after PPP forgiveness isn't itself a red flag. However, the IRS has increased scrutiny of ERC claims due to some fraudulent filings. Just ensure you have proper documentation showing: 1) eligibility based on either government orders that impacted operations or the gross receipts reduction, 2) clear tracking of which wages were used for PPP versus ERC, and 3) accurate calculations of the credit amounts. Keep detailed records of your shutdown period, including government orders that required it.

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Ava Harris

•8M

After getting totally confused about PPP vs ERC like you, I ended up using taxr.ai https://taxr.ai to help sort it out. They analyzed all our payroll docs and figured out exactly which wages we could use for ERC after our PPP forgiveness. Totally worth it because they found we qualified for about $42,000 in credits we would've missed. Their system specifically looks at your PPP forgiveness application to make sure you're not double-dipping on any wages. They also helped document our partial shutdown period which was super important since we were never fully closed (just restricted to takeout only). If you've got all your quarterly 941s and PPP forgiveness docs, they can analyze everything and tell you precisely what you qualify for.

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Ava Harris

•8M

The whole process took about 3 weeks from when I uploaded all our documents to when they provided the full analysis report. It was pretty straightforward - they have a secure portal where you upload your 941s, PPP forgiveness docs, and some basic info about how your business was impacted during the pandemic. They do both the qualification analysis and prepare the actual 941-X amended returns for you to file. They don't take a percentage of your refund like a lot of other companies do. Their model is different - they charge a flat fee based on the analysis work, not a contingency fee. That was actually one of the main reasons I trusted them more than the companies cold-calling me about "free ERC analysis" that wanted 25% of whatever I got back.

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Jacob Lee

•8M

Just wanted to update since I tried taxr.ai after seeing it mentioned here. Really glad I did! They analyzed our restaurant's documents and found we could claim about $67,500 in ERC even after our PPP loan was fully forgiven. Turns out we were eligible not just for Q2 2020 when we were shut down, but also Q4 2020 and Q1-Q3 2021 because we had capacity restrictions that counted as partial suspension. What I appreciated most was how they clearly documented which wages were already used for PPP forgiveness and made sure there was no overlap with what we claimed for ERC. They actually prepared all the 941-X forms with exact calculations for each quarter. Just filed them last month and now waiting for the refunds. The whole experience was way more legit than I expected given all the sketchy ERC ads I've been seeing.

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Sophie Hernandez

•8M

Just a heads up if you're looking into this - I tried for WEEKS to get through to someone at the IRS to ask questions about our ERC eligibility and PPP overlap. It was literally impossible. Finally used https://claimyr.com to get through (you can see how it works here: https://youtu.be/_kiP6q8DX5c). They somehow got me connected to an actual IRS agent in about 20 minutes when I had been trying for days on my own. The agent was able to confirm that yes, you can claim both PPP and ERC as long as you don't use the same wages for both programs. She also said the shutdown period absolutely qualifies you, and gave me specific guidance on how to document everything properly on the 941-X forms. Just having that official confirmation before filing made me feel 1000% more confident we were doing it right. Definitely recommend having that conversation with the IRS before filing anything.

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Sophie Hernandez

•8M

It basically works by having their system navigate the IRS phone menu and wait on hold for you. Once they get an agent on the line, you get a call connecting you directly to that agent. So yes, they basically do the hold time for you, which was about 2.5 hours in my case! The reason it actually works is they have some kind of system that keeps trying different IRS phone numbers and menu options until they find an open line. Their website explains it better than I can, but from my experience, it definitely works. I was skeptical too, but when you're desperate for answers and keep getting disconnected after waiting for hours, it's worth trying something different.

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Ryan Kim

•8M

I need to eat my words and apologize. After my skeptical comment, I broke down and tried Claimyr because I was desperate to talk to someone at the IRS about our ERC claim. Shockingly, it actually worked! They got me through to an IRS agent in about 35 minutes (I had been trying for literally weeks on my own). The agent confirmed everything about being able to claim both PPP and ERC, and even walked me through exactly how to document our shutdown period from March-April 2020. She specifically said to include copies of the local health department order that forced us to close, along with our financial records showing the impact. This kind of specific guidance was exactly what I needed before submitting our 941-X forms. Honestly still surprised this service actually worked. Sometimes you gotta admit when you're wrong!

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Zoe Walker

•8M

One thing nobody's mentioned yet - make sure you have SOLID documentation about those 4-5 weeks you were shut down. My accountant said the IRS is really scrutinizing the "full or partial suspension" eligibility lately. You should have copies of: 1. The actual government orders that forced you to close 2. Any communications to employees/customers about the closure 3. Financial records showing the impact during that period 4. Documentation of when/how you reopened and any restrictions Don't just rely on your memory of being closed - the IRS wants to see the actual orders that mandated it. This has been a huge issue for some businesses that claimed ERC but can't produce the documentation to back it up.

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Zoe Walker

•8M

Bank statements showing the revenue drop would definitely be helpful as supporting evidence, but the government orders are the primary documentation you need for the "full or partial suspension" test. Keep both! The revenue drop actually relates more to the other qualifying test (the gross receipts test), which requires a 50% reduction in quarterly gross receipts for 2020 compared to the same quarter in 2019. But even if you don't meet that test, the suspension of operations from the health department order should qualify you on its own. Make sure you also document any capacity restrictions or operating limitations you faced after reopening. Things like reduced seating capacity, mask requirements, social distancing requirements, etc. can qualify as a "partial suspension" even after you were allowed to reopen. This documentation could potentially help you qualify for additional quarters beyond just the complete shutdown period.

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