Home >> Employee Retention >> New York >> Clay >> Tax Credit
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.
Services provided can include:
Dedicated professionals that will certainly translate very intricate program rules and also will certainly be available to address your inquiries, including:
What duration does the program cover?
Clay NY Employee Retention Tax Credit
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.
How It Works
Even if you don't own a service, be sure to share this video with organization owners you know, this video might literally be worth 10s of thousands of dollars for them. And if you are an organization owner and after you view this video you want 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 email, [email protected], tell me a little about your service and your ballpark year-over-year earnings, and let's see if we can get some more money back in your pocket since you can take this credit versus your payroll taxes you pay by reducing your required employment tax deposits or you can request an advance payment of the credit using IRS Form 7200, Advance Payment of Employer Credits Due to COVID-19.
I am not going to get into the complexities of that form here or the Form 941 and all the payroll things since that's the things your CPA must stress about. In this video I desire to tell you what you require 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?" You can be informed and take ownership of your own tax scenarios, of your company's tax situation to generate more money circulation in your business and more wealth for yourself.
Related Posts
About Employee Retention Tax Credit
Alright, now let's dig into this and let's talk about the employee retention credit or the ERC as some folks like to call it, prior to I get into this, I wish to say that absolutely nothing in this video is to be taken as legal or tax recommendations, this video is for basic informational purposes only, yes, I am a tax and a certified public accountant expert, however I am not your CPA nor your tax professional unless you have actually engaged my firm as such. Another disclaimer here, for functions of this video I am assuming that if you're enjoying this you are a little company owner, which for employee retention credit functions means one hundred or less staff members for functions of the 2020 credit and 5 hundred or fewer staff members for functions of the 2021 credit, if you have a business with over five 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 regional tax expert who is so neck-deep in income tax return right now due to the fact that the federal government extended the tax due date to May 17 or volume is just the nature of their business that your tax expert hasn't had the time to dig 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 because then, because the CARES Act? Why is it getting all this buzz now that it wasn't last year? 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, however 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. Initially, in 2020, if you received a PPP loan as an employer, you were not eligible for the employee retention credit.
However the stimulus bill passed in December, the Consolidated Appropriations Act, as well as the American Rescue Plan Act, passed in February 2021, made changes to the ERC making it a lot more attractive. So essentially the employee retention credit had a glow-up between 2020 and 2021, it went from the nerdy lady with neglected eyebrows and thick glasses and her hair up in 2020 to the belle of the ball for business owners in 2021. Why? Why is the employee retention credit more attractive now thanks to the Consolidated Appropriations Act and the American Rescue Plan Act? I'll tell you why, a couple of factors.
Why Employee Retention Tax Credit
First reason, the employee retention credit for both 2020 and 2021 is now offered to PPP recipients, however obviously you can't double dip. You can't get PPP for the hundred thousand dollars you paid your workers and then turn around and declare the employee retention credit on those earnings. The federal government doesn't look too fondly on paying your payroll for you through the PPP and then you claiming a credit versus the taxes you pay the federal government on those salaries that the government paid for you. So 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 need to choose the very best covered period that will get you complete PPP forgiveness but likewise optimize your employee retention credit.
Likewise, for PPP forgiveness, you wish to fill that payroll pail with as numerous expenses as possible that don't count for employee retention credit purposes. For example, you can't claim the employee retention credit on state joblessness insurance coverage contributions, however state joblessness insurance coverage contributions count toward PPP forgiveness, see? You 'd desire to discard all your state joblessness insurance coverage contributions on your PPP forgiveness application to leave as much normal wages as possible to take the employee retention credit on.
So this can get very technical really fast and it's really situation specific in terms of enhancing PPP vs. ERC and my company has tools to figure this stuff out for you, I'm not going to go into all that here, but feel in one's bones that you truly need to do the math when doing your PPP forgiveness to make certain you're not leaving anything on the table in terms of the employee retention credit. Another thing to note is you can't subtract the salaries you declared the employee retention credit on, and that makes sense too, why should the federal government provide you a reduction for these salaries that they currently gave you a credit for? So essentially the credit is tax-effected. Alright, sorry for getting a little sidetracked there, I just enjoy speaking about this stuff, but let's discuss another factor why the employee retention credit is more attractive now than it was last year, which is that it's easier to receive the employee retention credit in 2021. In 2020, for a quarter to qualify for the employee retention credit, you had to show a 50% decline in gross receipts compared to the same calendar quarter in 2019.
But in 2021, for a quarter to receive the employee retention credit, you only need to reveal a 20% reduction in gross receipts compared to the same calendar quarter in 2019. So this implies far more organizations will certify. My company, for instance, experienced a 26% decrease in gross invoices, comparing Q1 2019 to Q1 2021, and it was a similar story last year too.
I didn't certify for the 2020 employee retention credit first, since I got first round of PPP cash and second due to the fact that my business didn't suffer that large 50% decrease needed to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my company certifies. For 2021, for any quarter, you can choose to utilize the lookback quarter, indicating that, for example, even if your Q1 2021 gross receipts aren't at least 20% lower than your Q1 2019 gross invoices, you can compare for purposes of determining eligibility for the employee retention credit for Q1 2021, you can compare Q4 2020 to Q4 2019. Implication here is that if you qualify for Q1 2021 based upon Q1 2021's gross receipts, you will also get approved for Q2 2021 since you qualified in the lookback quarter of Q1 2021.
Exact same thing for Q2 to Q3 and Q3 to Q4, so basically if you just qualify for Q1 and Q3 2021, you likewise get approved for Q2 and Q4 based upon the lookback. Even if you didn't have an enough decrease in income, you can certify for the employee retention credit if you were required to completely or partially suspend operations in your business throughout any calendar quarter in 2020 or 2021 due to state or federal orders, in which case you are eligible for the employee retention credit during that duration of partial or complete shutdown.
Common example, you own a restaurant, and your guv signed an executive order specifying that you require to close down indoor dining. That is an example of a partial shutdown. Also, not only are more companies eligible for the employee retention credit thanks to these new laws, making PPP recipients qualified for the employee retention credit though not on the very same earnings and making more companies eligible through the 20% decline threshold instead of the 50% decline limit, but the 2021 credit is likewise more rewarding than the 2020 credit.
Not bad, however that's absolutely nothing compared to the 2021 credit because for 2021, the credit is equivalent to 70% of qualified earnings per worker paid from January 1, 2021 through December 31, 2021, limited to $10,000 in salaries per employee ... for that whole time duration? For 2021 the percentage is more (70% in 2021 vs. 50% in 2020) and you can take it on up to $10,000 in incomes per worker per quarter, so we're talking about a maximum credit of $7,000 per worker per quarter. That's right, folks, the maximum 2021 employee retention credit is $28,000 per employee.
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 duration that will get you complete PPP forgiveness but also maximize your employee retention credit.
Alright, sorry for getting a little sidetracked there, I just like talking about this stuff, however let's talk about another factor why the employee retention credit is more attractive now than it was last year, and that is that it's simpler to qualify for the employee retention credit in 2021. I didn't certify for the 2020 employee retention credit initially, due to the fact that I got first round of PPP cash and second because my business didn't suffer that large 50% decline needed to certify for the employee retention credit last year.But for 2021, at least for Q1, yeah, my business certifies. Not just are more companies eligible for the employee retention credit thanks to these brand-new laws, making PPP recipients qualified for the employee retention credit though not on the same salaries and making more businesses eligible through the 20% decline limit rather than the 50% decline threshold, but the 2021 credit is likewise more financially rewarding 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 earnings per staff member paid from January 1, 2021 through December 31, 2021, restricted to $10,000 in incomes per employee ... for that entire time period?
Just How to Begin
The very best means is to collaborate with a no-risk, contingency-based expense financial savings business. That will certainly bargain on behalf of their customers to get the best costs possible for their existing customers. They will certainly audit old invoices for errors obtaining for their clients refunds as well as credits. They can increase the profitability as well as total assessment of their clients organizations.
Services provided can include:
Dedicated professionals that will certainly translate very intricate program rules and also will certainly be available to address your inquiries, including:
Exactly how does the PPP funding aspect right into the ERC?
What are the distinctions between the 2020 as well as 2021 programs and also exactly how does it relate to your service?
What are gathering rules for bigger, multi-state employers, as well as just how do I translate several states executive orders?
Just how do part-time, Union, as well as tipped workers impact the quantity of my reimbursements?
Detailed examination concerning your qualification
Detailed evaluation of your case
Guidance on the asserting process and documentation
Particular program knowledge that a regular CPA or payroll processor could not be well-versed in
Smooth and quick end-to-end procedure, from qualification to asserting and getting reimbursements
| Adams Brown Strategic Allies and CPAs https://www.adamsbrowncpa.com/ertc-tax-credit-consulting-new-york/ |
| Finance Pro Plus https://www.financeproplus.com/ |
| 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 |
| Omega Funding solutions https://www.omegafundingsolutions.com/ |
| Disisaster Loan Advisors https://www.disasterloanadvisors.com/ |
| ERTC Filing https://info.ertcfiling.com/employee-retention-tax-credit-new-york-11368/ |
Prepared To Get Started? Its Simple.
1. Whichever firm you select to work with will certainly figure out whether your organization qualifies and gets approvel for the ERC.
2. They will evaluate your claim and compute the maximum quantity you can receive.
3. Their group overviews you via the claiming procedure, from beginning to finish, including correct documentation.
Frequently Asked Questions (FAQs)
What duration does the program cover?
The program started on March 13th, 2020 as well as finishes on September 30, 2021, for qualified companies.
You can request reimbursements for 2020 and also 2021 after December 31st of this year, into 2022 as well as 2023. As well as possibly past after that as well.
Many companies have received refunds, and others, in addition to refunds, likewise qualified to continue getting ERC in every pay-roll they refine through December 31, 2021, at about 30% of their payroll expense.
Some businesses have received reimbursements from $100,000 to $6 million.
Do we still qualify if we currently took the PPP?
Yes. Under the Consolidated Appropriations Act, organizations can now receive the ERC also if they already received a PPP financing. Note, however, that the ERC will only relate to wages not utilized for the PPP.
sustain a 20% decline in gross receipts .
A federal government authority called for complete or partial shutdown of your business throughout 2020 or 2021. This includes your operations being limited by commerce, lack of ability to take a trip or restrictions of group meetings.
- Gross receipt reduction requirements is various for 2020 and also 2021, but is gauged against the present quarter as contrasted to 2019 pre-COVID quantities:
- A federal government authority required full or partial shutdown of your business throughout 2020 or 2021. This includes your operations being restricted by commerce, lack of ability to take a trip or limitations of team meetings.
- Gross invoice reduction standards is different for 2020 and also 2021, however is determined against the existing quarter as compared to 2019 pre-COVID quantities.
Do we still qualify if we remained open during the pandemic?
Yes. To qualify, your company must satisfy either one of the complying with standards:
- Experienced a decrease in gross invoices by 20%, or
- Needed to change business operations as a result of government orders
Several products are taken into consideration as adjustments in service operations, consisting of shifts in work roles and also the purchase of extra protective tools.