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Most likely, you have heard about the PPP Loan and may have received one or two of them already. But, have you heard of the Employee Retention Credit (ERC)? This credit holds the potential for thousands of dollars back to the employer’s bottom line–for both 2020 AND 2021. Take a quick read about qualifications and how to access these funds.
The ERC is a payroll tax credit for qualified wages and employer healthcare costs paid between March 13, 2020 and Dec 31, 2020. For 2020, the ERC is available to employers based on two cases: 1) A reduction in gross receipts of 50% or more; or 2) If operations were partially or fully suspended due to government-ordered shutdowns. If your organization or business qualifies, you might be eligible to receive an additional $5,000 per employee for the year.
Originally, the law was such that you could not take a PPP loan AND the ERC. However, recent legislation changed those rules, now allowing both PPP and ERC—just not on the same wages. Additionally, the legislation extended the program through June 30, 2021 and made it retroactive to 2020 if an employer wants to file retroactively for the credits.
Furthermore, the 2021 qualifications and credits have changed. Employers can qualify if there is a 20% or more reduction in receipts, or operations are partially or fully suspended due to government-ordered shutdowns. Credits for 2021 are up to $7,000 per employee per quarter, with a maximum credit for the year per employee of $28,000.
The first step will be determining whether your organization or company qualifies for the credits. Forest Acres Payroll recommends consulting your CPA or financial advisor for this determination. Once you have determined qualification, we will calculate the credits, amend any returns necessary and file for the credits on your behalf. We will do this on a contingency basis with a small down payment for the services, with the remaining amount due once the credit is received by the employer. In return, we will work with you to calculate these credits, amend the appropriate payroll returns and file with the IRS to claim your credit. You will receive refund checks from the IRS for each quarter filed. We will provide records to you showing the tax credit calculations so you will have a complete audit trail just in case you ever need it.
If a PPP loan has already been used and/or forgiven, we will work with you to isolate those funds to ensure you maximize credits without double dipping.
If you are interested in learning more about this program and how Forest Acres Payroll can help your organization or business, please contact us.
This article is for informational purposes only. For details regarding your organization or business’ particular tax situation, please discuss with your CPA or financial advisor.
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