What is the ERC, The Employee Retention Tax Credit?
Simply put, ERC is a FAT check in your hand.
Employee Retention Credits (ERTC) are tax credits used by employers to offset the cost of certain wages paid between March of 2020, through September 30, 2021 (ultimately). These credits are part of an original pitch for the CARES act of 2020 to be used to encourage businesses to retain as many of their staff on payroll as possible.
These credits are to be used to support small businesses in this time of uncertainty, and to help them reinvest in their staff. In order to qualify for ERTC, a business must have taken, or applied for, a loan under the initial PPP These credits are to be used to qualify up to 70% of paid wages, and would continue to be qualified through the first half of 2021.
These credits cannot be used on wages that have already been forgiven, or are expected to be forgiven, and they must be wages subject to FICA taxes. For more information on the amount of help that can be claimed, use this ERTC calculator. Ultimately, these credits will be filed on Form 941.
(From MyFranchiseCPAs.com)
* Note: taking this credit can impact your annual tax return.
* ERC is available to business owners only.
ERC Requirements
ERC Requirements – Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business during calendar year 2020 or 2022 and experience either:
- The full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel or group meetings due to COVID-19, or
- A significant decline in gross receipts.
A significant decline in gross receipts begins:
- On the first day of the first calendar quarter of 2020
- For which an employer’s gross receipts are less than 50% of its gross receipts
- For the same calendar quarter in 2019.
The significant decline in gross receipts ends:
- On the first day of the first calendar quarter following the calendar quarter
- In Which gross receipts are more than of 80% of its gross receipts
- For the same calendar quarter in 2019.
The credit applies to qualified wages (including certain health plan expenses) paid during this period or any calendar quarter in which operations were suspended.
(From IRS.gov)
ERC Recovery Now is brought to you by My Franchise CPAs, from Boca Raton, Florida.
We are a full service CPA firm and can assist you with tax planning and more!
ERC Recovery Now is brought to you by My Franchise CPAs, from Boca Raton, Florida.
We are a full service CPA firm and can assist you with tax planning and more!