A Final Lifeline for Nonprofits
Nonprofits hit hard by the COVID-19 pandemic have one last shot at financial relief: the Employee
Retention Credit (ERC) for 2021. This refundable payroll tax credit, launched under the CARES Act in
2020, helped tax-exempt organizations keep staff on payroll during the crisis. Though the program
ended in September 2021, nonprofits can still claim it retroactively for 2021 by filing amended payroll
tax returns. The catch? The deadline is April 15, 2025—less than six weeks away and it’s your final
chance since the 2020 window closed last year.
Why 2021 Matters Now
For 2021, the ERC offers up to $7,000 per employee per quarter, maxing out at $28,000 per employee
for the year. For a nonprofit with a modest staff, that could mean tens or hundreds of thousands of
dollars to shore up cash flow, fund missions, or offset losses. Unlike the Paycheck Protection Program
(PPP), which many nonprofits used, the ERC isn’t a loan—no repayment needed. Updates in late 2020
also allow claiming both PPP and ERC for 2021, as long as you don’t double-count the same wages,
making it a vital boost even for PPP recipients.
Are You Eligible for 2021?
Eligibility for 2021 rests on two tests: a significant decline in gross receipts (20% drop in any 2021
quarter compared to the same quarter in 2019) or a full/partial suspension of operations due to
government orders (e.g., capacity limits or shutdowns). Nonprofits like churches, charities, and schools
often qualify under suspension—think reduced in-person events or virtual-only programming due to
2021 mandates. Gross receipts include donations and grants, so even if service income dipped, many
501(c)(3)s can still claim it.
The 2021 Deadline Looms
Time’s running out: the deadline to file Form 941-X (Adjusted Employer’s Quarterly Federal Tax Return)
for 2021 quarters is April 15, 2025. Miss it, and those funds vanish—the 2020 deadline already passed
on April 15, 2024, leaving 2021 as your last shot. IRS processing lags at 90 to 180 days due to a 400,000-
claim backlog and fraud checks—new claims were paused until December 31, 2024, but 2021 retroactive
filings are still open. File now, and you might see cash by mid-2025; delay, and it’s gone.
Avoid the Traps
Beware pitfalls: IRS warnings highlight ERC fraud—scammers pushing inflated 2021 claims for a cut. Red
flags include overclaiming wages without proof, citing vague “supply issues,” or promoters skipping
signatures. Nonprofits need trusted tax pros, not shady vendors with contingency fees. Keep payroll
records, government orders, and revenue data tight—retain them four years post-claim.
Claim 2021 Before It’s Too Late
The ERC for 2021 is a nonprofit’s chance to claw back pandemic losses—but only if you act fast. With
April 15, 2025, closing in, consult your CPA, compile your 2021 records, and file that 941-X. This window
won’t reopen—don’t let it shut on money you’re owed.
