Home >> Employee Retention >> New York >> Cheektowaga >> Tax Credit Reinstatement Act
Alright, everybody, so the SBA this week came out and said that it has stopped accepting new PPP applications from most lenders. The SBA informed lenders this past Tuesday that the PPP general fund was out of money and that the only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which are institutions that specifically work with businesses in underserved communities. But all is not lost, dear small business owners of America. If you missed out on the PPP or if you did not qualify for the PPP, don't lose hope because you may still qualify for the employee retention credit on all those wages you didn't claim for PPP forgiveness, and this employee retention credit could be worth up to $28,000 per employee. And yes, even if you got PPP money, you can still get a piece of this employee retention credit cake.
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What duration does the program cover?
Cheektowaga NY Employee Retention Tax Credit Reinstatement Act
Alright, everybody, so the SBA this week came out and said that it has stopped accepting new PPP applications from most lenders. The SBA informed lenders this past Tuesday that the PPP general fund was out of money and that the only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which are institutions that specifically work with businesses in underserved communities. But all is not lost, dear small business owners of America. If you missed out on the PPP or if you did not qualify for the PPP, don't lose hope because you may still qualify for the employee retention credit on all those wages you didn't claim for PPP forgiveness, and this employee retention credit could be worth up to $28,000 per employee. And yes, even if you got PPP money, you can still get a piece of this employee retention credit cake.
Just how It Functions
Even if you do not own a service, be sure to share this video with company owners you know, this video might literally be worth tens of thousands of dollars for them. And if you are a business owner and after you watch this video you desire to talk with me and a member of my group, who will also be either a CPA like myself or an EA, shoot me an e-mail, [email protected], inform me a little about your organization and your ballpark year-over-year earnings, and let's see if we can get some more money back in your pocket due to the fact that you can take this credit versus your payroll taxes you pay by decreasing your required work tax deposits or you can ask for an advance payment of the credit utilizing IRS Form 7200, Advance Payment of Employer Credits Due to COVID-19.
I am not going to get into the intricacies of that kind here or the Form 941 and all the payroll things since that's the things your CPA must stress over. In this video I wish to inform you what you need to understand so you can go to your CPA and say, "Hey, what about this employee retention credit, why haven't you told me about this?" so you can be informed and take ownership of your own tax situations, of your company's tax scenario to generate more capital in your service and more wealth for yourself.
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About Employee Retention Tax Credit Reinstatement Act
Alright, now let's dig into this and let's speak about the employee retention credit or the ERC as some folks like to call it, prior to I enter into this, I wish to state that absolutely nothing in this video is to be taken as legal or tax guidance, this video is for basic informational functions just, yes, I am a tax and a cpa professional, but I am not your CPA nor your tax professional unless you have engaged my company as such. Another disclaimer here, for functions of this video I am presuming that if you're seeing this you are a little company owner, which for employee retention credit purposes implies one hundred or less staff members for functions of the 2020 credit and 5 hundred or fewer employees for functions of the 2021 credit, if you have a company with over 5 hundred employees I imagine you have in-house counsel, in-house CPAs who are on top of this things, but I'm here for you small company owners who may deal with a local tax expert who is so neck-deep in income tax return today because the federal government extended the tax deadline to May 17 or volume is simply the nature of their service that your tax expert hasn't had the time to go into the weeds here like I have.
So employee retention credit, why is it so financially rewarding for entrepreneur in 2021 and why weren't we speaking about it in 2020, it's been around ever since, given that the CARES Act? Why is it getting all this buzz now that it wasn't in 2015? Well, let's back it up. Yes, the employee retention credit has actually been around considering that the CARES Act that was passed over a year ago in March 2020, but the employee retention credit didn't get much love in 2015 in 2020 due to the fact that of the PPP, the Paycheck Protection Program. Originally, in 2020, if you got a PPP loan as a company, you were not eligible for the employee retention credit.
Generally the employee retention credit had a glow-up in between 2020 and 2021, it went from the nerdy girl with thick glasses and neglected eyebrows and her hair up in 2020 to the belle of the ball for business owners in 2021. Why is the employee retention credit more attractive now thanks to the Consolidated Appropriations Act and the American Rescue Plan Act?
Why Employee Retention Tax Credit Reinstatement Act
Factor, the employee retention credit for both 2020 and 2021 is now offered to PPP recipients, however of course you can't double dip. You can't get PPP for the hundred thousand dollars you paid your workers and after that reverse and claim the employee retention credit on those wages too. The federal government does not look too fondly on paying your payroll for you through the PPP and after that you declaring a credit against the taxes you pay the federal government on those wages that the federal government paid for you. That makes sense. Now, there's some planning here. If you got PPP and you are qualified for the employee retention credit, then when you do your PPP forgiveness application, you require to choose the finest covered period that will get you full PPP forgiveness however likewise optimize your employee retention credit.
For PPP forgiveness, you want to fill up that payroll container with as lots of costs as possible that do not count for employee retention credit purposes. You can't declare the employee retention credit on state unemployment insurance contributions, but state joblessness insurance contributions count towards PPP forgiveness, see? You 'd desire to dump all your state unemployment insurance contributions on your PPP forgiveness application to leave as much regular salaries as possible to take the employee retention credit on.
Another thing to note is you can't subtract the wages you claimed the employee retention credit on, and that makes sense as well, why should the government offer you a reduction for these wages that they currently offered you a credit for? Alright, sorry for getting a little sidetracked there, I simply enjoy talking about this stuff, but let's talk about another reason why the employee retention credit is more appealing now than it was last year, and that is that it's easier to certify for the employee retention credit in 2021.
In 2021, for a quarter to qualify for the employee retention credit, you just require to show a 20% decrease in gross receipts compared to the same calendar quarter in 2019. So this indicates far more services will qualify. My company, for example, experienced a 26% decrease in gross invoices, comparing Q1 2019 to Q1 2021, and it was a similar story last year too.
So I didn't certify for the 2020 employee retention credit initially, since I got first round of PPP money and 2nd because my business didn't suffer that large 50% decrease required to receive the employee retention credit last year.But for 2021, a minimum of for Q1, yeah, my service certifies. Also, for 2021, for any quarter, you can choose to utilize the lookback quarter, implying that, for instance, even if your Q1 2021 gross invoices aren't at least 20% lower than your Q1 2019 gross receipts, you can compare for functions of identifying eligibility for the employee retention credit for Q1 2021, you can compare Q4 2020 to Q4 2019. Ramification here is that if you receive Q1 2021 based upon Q1 2021's gross receipts, you will likewise get approved for Q2 2021 because you qualified in the lookback quarter of Q1 2021.
Same thing for Q2 to Q3 and Q3 to Q4, so generally if you simply qualify for Q1 and Q3 2021, you also get approved for Q2 and Q4 based upon the lookback. Even if you didn't have an enough decline in profits, you can certify for the employee retention credit if you were required to completely or partly suspend operations in your business during any calendar quarter in 2020 or 2021 due to state or federal orders, in which case you are qualified for the employee retention credit throughout that period of partial or complete shutdown.
Common example, you own a dining establishment, and your governor signed an executive order mentioning that you need to shut down indoor dining. That is an example of a partial shutdown. Not just are more companies eligible for the employee retention credit thanks to these new laws, making PPP receivers eligible for the employee retention credit though not on the very same wages and making more services eligible through the 20% decrease limit rather than the 50% decrease threshold, but the 2021 credit is likewise more profitable than the 2020 credit.
This is since for 2020, the employee retention credit amounted to 50% of all qualified wages for 2020, the employee retention credit was equivalent to 50% of all qualified incomes you paid staff members in between March 12, 2020, and December 31, 2020, with a limit of $10,000 in earnings for that whole time period. So the maximum 2020 credit per staff member was $5,000. Not bad, however that's nothing compared to the 2021 credit because for 2021, the credit is equivalent to 70% of qualified wages per worker paid from January 1, 2021 through December 31, 2021, restricted to $10,000 in salaries per staff member ... for that entire time period? No. Per quarter. So for 2021 the portion is more (70% in 2021 vs. 50% in 2020) and you can take it on up to $10,000 in earnings per worker per quarter, so we're discussing an optimum credit of $7,000 per worker per quarter. $7,000 times 4 is $28,000 if you're eligible all four quarters. That's right, folks, the maximum 2021 employee retention credit is $28,000 per worker. That's substantial. That's a godsend to many company owners right now. So you see what I indicate now, right, how the employee retention credit has gone from unsightly duckling in 2020 to lovely swan in 2021, right? And by the method, by the method, certified salaries consists of employer-paid health insurance premiums.
If you got PPP and you are eligible for the employee retention credit, then when you do your PPP forgiveness application, you require to select the finest covered duration that will get you complete PPP forgiveness however also optimize your employee retention credit.
Alright, sorry for getting a little sidetracked there, I simply enjoy talking about this things, but let's talk about another factor why the employee retention credit is more appealing now than it was last year, and that is that it's easier to certify for the employee retention credit in 2021. I didn't qualify for the 2020 employee retention credit first, due to the fact that I got first round of PPP cash and second due to the fact that my organization didn't suffer that big 50% decrease required to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my company qualifies. Not just are more businesses qualified for the employee retention credit thanks to these brand-new laws, making PPP recipients qualified for the employee retention credit though not on the very same wages and making more services eligible through the 20% decline threshold rather than the 50% decrease limit, but the 2021 credit is also more lucrative than the 2020 credit.
Not bad, but that's absolutely nothing compared to the 2021 credit because for 2021, the credit is equal to 70% of certified salaries per staff member paid from January 1, 2021 through December 31, 2021, restricted to $10,000 in earnings per employee ... for that entire time duration?
Exactly How to Start
That will work out on part of their clients to get the best prices feasible for their existing customers. They will certainly investigate old billings for mistakes obtaining their customers refunds and tax credits.
Solutions offered can include:
Committed professionals that will translate extremely complex program regulations and also will certainly be available to answer your concerns, including:
How does the PPP funding aspect into the ERC?
What are the differences between the 2020 and 2021 programs as well as just how does it relate to your organization?
What are aggregation rules for bigger, multi-state companies, as well as just how do I translate several states executive orders?
Exactly how do part-time, Union, and tipped employees influence the amount of my reimbursements?
Complete examination concerning your eligibility
Comprehensive evaluation of your case
Support on the asserting procedure and also documentation
Details program knowledge that a normal certified public accountant or payroll processor could not be well-versed in
Smooth and also quick end-to-end process, from eligibility to declaring and also receiving refunds
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| Bottom Line Concepts https://erc.bottomlinesavings.com/ |
| Equifax Workforce Solutions https://workforce.equifax.com/solutions/employee-retention-credit |
| Valiant Capital https://erc.valiant-capital.com/ |
| NYC Business https://www1.nyc.gov/nycbusiness/article/nyc-employee-retention-grant-program |
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| Disisaster Loan Advisors https://www.disasterloanadvisors.com/ |
| ERTC Filing https://info.ertcfiling.com/employee-retention-tax-credit-new-york-11368/ |
Prepared To Obtain Started? Its Simple.
1. Whichever business you select to work with will certainly determine whether your company qualifies and gets approvel for the ERC.
2. They will assess your case and compute the maximum quantity you can obtain.
3. Their group overviews you via the claiming procedure, from starting to end, consisting of correct documentation.
Frequently Asked Questions (FAQs)
What duration does the program cover?
The program began on March 13th, 2020 and right on September 30, 2021, for qualified companies.
You can apply for refunds for 2020 as well as 2021 after December 31st of this year, into 2022 as well as 2023. As well as potentially past after that also.
Many organizations have received refunds, and also others, along with refunds, additionally qualified to proceed receiving ERC in every pay-roll they refine to December 31, 2021, at around 30% of their payroll expense.
Some services have actually obtained refunds from $100,000 to $6 million.
Do we still certify if we currently took the PPP?
Yes. Under the Consolidated Appropriations Act, organizations can now qualify for the ERC even if they already got a PPP funding. Note, however, that the ERC will just use to earnings not made use of for the PPP.
Do we still certify if we did not) incur a 20% decrease in gross receipts .
A federal government authority required full or partial shutdown of your service throughout 2020 or 2021. This includes your operations being restricted by business, inability to take a trip or restrictions of team meetings.
- Gross invoice reduction requirements is various for 2020 as well as 2021, but is measured against the current quarter as compared to 2019 pre-COVID amounts:
- A federal government authority required full or partial shutdown of your company throughout 2020 or 2021. This includes your procedures being limited by commerce, lack of ability to travel or constraints of team meetings.
- Gross receipt decrease criteria is various for 2020 and also 2021, however is gauged versus the current quarter as contrasted to 2019 pre-COVID amounts.
Do we still certify if we continued to be open throughout the pandemic?
Yes. To qualify, your organization needs to meet either one of the adhering to standards:
- Experienced a decline in gross invoices by 20%, or
- Needed to transform service operations because of government orders
Numerous things are taken into consideration as modifications in business procedures, consisting of changes in work roles and also the purchase of added safety tools.