I have an Employee Retention Credit for March 2020, but there is no option to choose Quarter 1 on Form 7200. What do I do?
870 views | Last modified 6/18/2020 3:33:54 AM EST

Now, this is one of the questions often asked as to which quarter to choose on the Form 7200 for qualified wages paid anytime between March 13, 2020, and March 31, 2020, as the form does not have the option to select quarter one under the Applicable Calendar Quarter section.

COVID-19 cases were reported in the US from mid-march 2020. They were having a significant impact on businesses who had to fully or partially suspend their business operations as a result of COVID-19. On April 1, 2020, the IRS finalized Form 7200 that allowed eligible employers to take advantage of refundable tax credits under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security Act (CARES Act). That's why the Applicable Calendar Quarter section of the form only lists quarters 2 through 4.

Usually, the qualified wages paid to the employees in a quarter applies to the same quarter. Since the impact of COVID-19 on business was noticeable from later part of March 2020, as a relief to affected employers, the IRS decided that any qualified wages paid to employees between March 13, 2020, and March 31, 2020, may also be considered for the second quarter in Form 7200.

So, choose calendar quarter 2 (April, May, June) on the form to claim the employee retention credit for March 2020. On line 1, enter 50% of the qualified wages paid between March 13, 2020, and March 31, 2020, along with 50% of any other qualified wages paid during the second quarter.