Form 7200 is a form that was introduced in the midst of the many programs offered to help businesses during COVID-19. It is used to request an advance payment of the tax credits for qualified sick and qualified family leave wages, and the employee retention credit.
How does form 7200 work?
Form 7200 is intended to help employers get access to the credits they qualify for quickly. The filing of this form is entirely optional.
For most employers, obtaining the credit is as simple as reducing their federal tax payments prior to submitting them, in order to retain cash.
That said, depending on the deposit frequency of your business, you may deem it faster to request an advance payment of those credits rather than reducing your tax payments, in order to keep your cash flow more consistent.
Furthermore, if your tax liabilities are less than what your credit would be, you can also use form 7200 to request the remaining balance.
Otherwise, you would be requesting this refund using form 941 at the end of the quarter.
Who can file form 7200?
Employers who qualify for the sick and family leave credits and the employee retention credit are at liberty to file this form as often as needed. Do note that self-employed individuals do not fall into the category.
When can I file?
You can file the form for an advance payment of the credits anticipated for a quarter at any time before the end of the month following the quarter in which you paid the qualified wages.
You can file form 7200 several times during a quarter.
That said, the IRS does say to not file Form 7200 after you file Form 941 for the fourth quarter of 2020.
Do not file the form to request an advance payment for any anticipated credit for which you already reduced your deposits.
Where can I find the form?
Here are the IRS links to instructions and the form itself:
How do I submit the form?
You will have to fax your completed form to 855-248-0552.
Please note that Wave does not currently have the capability to file form 7200 on your behalf.
What are some common errors to avoid when filling out the form?
The IRS has provided a list of common errors on their webpage here.
As with all tax forms, it is important to double check your math, as well as any identifiable information (ie your FEIN, signature) to ensure accuracy. You can only select one quarter per form.
How is Wave reconciling my tax credits with any requested advance payments made using form 7200?
Wave is currently working on a way to have your advanced credit entered into your account to ensure accurate reporting.
If you are on Automatic Tax Payments with Wave, please reach out to our Support Team to let us know if you have submitted one or more of form 7200 in order to ensure your form 941 is accurate.
They will need to know:
- Date(s) filed
- Amount(s) entered on Line 8
Please provide this information per form 7200 filed.
Please note that if we are nearing the end to a quarter, any unclaimed amount that is sitting in your account will be reconciled on your form 941. If you are unsure if you should still file a form 7200, please reach out prior to filing to avoid a double claim.