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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.
Assistance supplied can include:
Committed professionals that will translate very complicated program guidelines and will certainly be available to address your inquiries, including:
What duration does the program cover?
Mount Vernon NY Employee Retention Tax Credit 2020
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.
Exactly How It Functions
Even if you do not own a service, be sure to share this video with business owners you understand, this video could literally be worth tens of thousands of dollars for them. And if you are an organization owner and after you see this video you desire to talk with me and a member of my group, who will likewise be either a CPA like myself or an EA, shoot me an e-mail, [email protected], inform me a little about your business and your ballpark year-over-year income, and let's see if we can get some more money back in your pocket because you can take this credit versus your payroll taxes you pay by decreasing your required work tax deposits or you can request an advance payment of the credit utilizing IRS Form 7200, Advance Payment of Employer Credits Due to COVID-19.
Since that's the stuff your CPA need to fret about, I am not going to get into the complexities of that form here or the Form 941 and all the payroll things. In this video I want to tell you what you need to understand so you can go to your CPA and state, "Hey, what about this employee retention credit, why haven't you informed me about this?" You can be informed and take ownership of your own tax scenarios, of your organization's tax situation to generate more money circulation in your company and more wealth for yourself.
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About Employee Retention Tax Credit 2020
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 want to state that nothing in this video is to be taken as legal or tax recommendations, this video is for general educational purposes just, yes, I am a CPA and a tax expert, however I am not your CPA nor your tax professional unless you have actually engaged my firm. Another disclaimer here, for functions of this video I am assuming that if you're seeing this you are a small company owner, which for employee retention credit purposes suggests one hundred or fewer employees for functions of the 2020 credit and 5 hundred or less employees for purposes of the 2021 credit, if you have a business with over 5 hundred workers I imagine you have in-house counsel, in-house CPAs who are on top of this things, however I'm here for you small company owners who may deal with a local tax professional who is so neck-deep in income tax return right now because the federal government extended the tax deadline to May 17 or volume is simply the nature of their organization that your tax specialist hasn't had the time to dig into the weeds here like I have.
Employee retention credit, why is it so financially rewarding for organization owners in 2021 and why weren't we talking about it in 2020, it's been around considering that then, because 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 since 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. Originally, in 2020, if you got a PPP loan as a company, you were not qualified for the employee retention credit.
Basically 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 organization owners in 2021. Why is the employee retention credit more appealing now thanks to the Consolidated Appropriations Act and the American Rescue Plan Act?
Why Employee Retention Tax Credit 2020
Reason, 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 employees and then reverse and declare the employee retention credit on those wages as well. The government does not look too fondly on paying your payroll for you through the PPP and then you claiming a credit against the taxes you pay the federal government on those incomes that the federal government paid for you. So that makes good sense. Now, there's some preparation 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 select the best covered duration that will get you complete PPP forgiveness but also maximize your employee retention credit.
For PPP forgiveness, you want to fill up that payroll bucket with as many costs as possible that don't count for employee retention credit purposes. For example, you can't declare the employee retention credit on state joblessness insurance coverage contributions, however state unemployment insurance contributions count towards PPP forgiveness, see? So you 'd want to discard all your state unemployment insurance coverage 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 deduct the wages you declared the employee retention credit on, and that makes sense as well, why should the federal government offer you a deduction for these incomes that they already gave you a credit for? Alright, sorry for getting a little sidetracked there, I just enjoy talking about this stuff, however 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 simpler to certify for the employee retention credit in 2021.
In 2021, for a quarter to certify for the employee retention credit, you only need to reveal a 20% decline in gross receipts compared to the exact same calendar quarter in 2019. This suggests far more organizations will qualify. My service, for example, experienced a 26% decline in gross invoices, comparing Q1 2019 to Q1 2021, and it was a similar story last year too.
So I didn't receive the 2020 employee retention credit first, because I got preliminary of PPP money and 2nd since my organization didn't suffer that large 50% decline needed to receive the employee retention credit last year.But for 2021, a minimum of for Q1, yeah, my company certifies. For 2021, for any quarter, you can elect to utilize the lookback quarter, meaning 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 functions 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 receive Q1 2021 based on Q1 2021's gross invoices, you will also get approved for Q2 2021 given that you certified in the lookback quarter of Q1 2021.
Exact same thing for Q2 to Q3 and Q3 to Q4, so generally if you simply get approved for Q1 and Q3 2021, you likewise certify for Q2 and Q4 based on the lookback. Also, even if you didn't have a sufficient decrease in income, you can receive the employee retention credit if you were needed to totally 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 duration of partial or complete shutdown.
Common example, you own a restaurant, and your guv signed an executive order mentioning that you require to shut down indoor dining. That is an example of a partial shutdown. Likewise, not only are more businesses eligible for the employee retention credit thanks to these new laws, making PPP receivers eligible for the employee retention credit though not on the exact same salaries and making more companies eligible through the 20% decline threshold instead of the 50% decrease limit, however the 2021 credit is also more rewarding than the 2020 credit.
This is because for 2020, the employee retention credit amounted to 50% of all certified incomes for 2020, the employee retention credit was equal to 50% of all qualified earnings you paid employees in between March 12, 2020, and December 31, 2020, with a limit of $10,000 in incomes for that whole time period. The optimum 2020 credit per employee was $5,000. Okay, but that's nothing compared to the 2021 credit since for 2021, the credit is equivalent to 70% of qualified earnings per staff member paid from January 1, 2021 through December 31, 2021, limited to $10,000 in salaries per employee ... for that entire period? No. Per quarter. For 2021 the portion is more (70% in 2021 vs. 50% in 2020) and you can take it on up to $10,000 in salaries per worker per quarter, so we're talking about an optimum credit of $7,000 per staff member per quarter. If you're eligible all four quarters, $7,000 times 4 is $28,000. That's right, folks, the maximum 2021 employee retention credit is $28,000 per worker. That's huge. That's a blessing to lots of company owner right now. You see what I imply now, right, how the employee retention credit has gone from awful duckling in 2020 to stunning swan in 2021? And by the method, by the method, qualified incomes 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 best covered period that will get you full PPP forgiveness however also maximize your employee retention credit.
Alright, sorry for getting a little sidetracked there, I simply like talking about this stuff, but 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 easier to qualify for the employee retention credit in 2021. I didn't qualify for the 2020 employee retention credit first, since I got first round of PPP cash and 2nd since my service 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 company certifies. Not just are more services eligible for the employee retention credit thanks to these new laws, making PPP recipients eligible for the employee retention credit though not on the exact same incomes and making more organizations eligible through the 20% decline threshold rather than the 50% decrease limit, however the 2021 credit is also more financially rewarding than the 2020 credit.
Not bad, but that's absolutely nothing compared to the 2021 credit since for 2021, the credit is equal to 70% of certified wages per staff member paid from January 1, 2021 through December 31, 2021, limited to $10,000 in salaries per worker ... for that whole time duration?
Exactly How to Start
The best method is to collaborate with a no-risk, contingency-based cost financial savings business. That will work out on behalf of their clients to get the very best prices feasible for their existing clients. They will certainly investigate old billings for errors obtaining for their clients reimbursements and credits. They can boost the earnings and general valuation of their customers companies.
Assistance supplied can include:
Committed professionals that will translate very complicated program guidelines and will certainly be available to address your inquiries, including:
How does the PPP financing factor into the ERC?
What are the differences between the 2020 and also 2021 programs and just how does it use to your business?
What are gathering policies for larger, multi-state companies, as well as how do I interpret multiple states executive orders?
Exactly how do part-time, Union, as well as tipped workers impact the amount of my reimbursements?
Detailed evaluation concerning your qualification
Comprehensive analysis of your case
Support on the asserting procedure and also paperwork
Certain program competence that a routine CPA or pay-roll processor may not be well-versed in
Smooth and also quick end-to-end process, from eligibility to claiming as well as obtaining refunds
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| 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 Going? Its Simple.
1. Whichever business you select to work with will figure out whether your service qualifies for the ERC.
2. They will certainly assess your claim and also compute the maximum amount you can obtain.
3. Their team guides you with the asserting process, from starting to finish, including proper documents.
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 organizations.
You can look for refunds for 2020 and also 2021 after December 31st of this year, into 2022 and 2023. As well as possibly past then also.
Many organizations have received refunds, and also others, in addition to refunds, additionally qualified to proceed obtaining ERC in every payroll they refine to December 31, 2021, at close to 30% of their payroll expense.
Some services have obtained refunds from $100,000 to $6 million.
Do we still qualify if we already took the PPP?
Yes. Under the Consolidated Appropriations Act, organizations can currently qualify for the ERC also if they currently got a PPP funding. Note, however, that the ERC will just put on earnings not utilized for the PPP.
Do we still accredit if we did not sustain a 20% reduction in gross billings .
A government authority required full or partial shutdown of your organization throughout 2020 or 2021. This includes your operations being limited by commerce, inability to travel or restrictions of group meetings.
- Gross invoice decrease criteria is different for 2020 as well as 2021, yet is measured versus the existing quarter as contrasted to 2019 pre-COVID quantities:
- A government authority needed full or partial closure of your service throughout 2020 or 2021. This includes your procedures being restricted by business, inability to take a trip or limitations of team conferences.
- Gross invoice reduction criteria is various for 2020 and 2021, yet is gauged against the current quarter as compared to 2019 pre-COVID quantities.
Do we still certify if we remained open during the pandemic?
Yes. To certify, your company needs to fulfill either one of the adhering to standards:
- Experienced a decline in gross receipts by 20%, or
- Needed to alter organization procedures as a result of government orders
Lots of things are thought about as changes in organization operations, consisting of shifts in work roles and also the purchase of extra safety equipment.