Questions About the Employee Retention Tax Credit (ERTC)
The Employee Retention Tax Credit (ERTC) is a refundable credit for businesses of up to $5,000 per employee for 2020 and up to $7,000 per employee per quarter for the first 3 quarters of 2021. The ERTC was authorized by the government-approved CARES Act in 2020 and updated in both the Consolidated Appropriation Act and Infrastructure Investment and Jobs Act in 2021. It was designed to provide federal aid to businesses affected by COVID lockdowns and encourage employers to keep employees on their payroll. The Employee Retention Tax Credit comprises the largest available cash credit available for businesses, but very few businesses know it exists.
Yes, you can now receive BOTH PPP funds and the Employee Retention Tax Credit.
In 2021, the Consolidated Appropriations Act expanded qualifications to include businesses who already took a loan under the PPP, who originally were ineligible to claim the Employee Retention Tax Credit.
Navigating through the ERTC filing process can get complex quickly. At RefundsPro, this is our specialty, and we have assisted hundreds of small and medium-sized businesses with their filings. We have a network of affiliated CPAs and tax professionals who have established best practices in maximizing tax refunds for businesses like yours. We are so confident in our process that we only receive payment once your business receives its tax refund. RefundsPro has simplified and de-risked this process for your business.
Due to recent changes, more businesses than ever can now qualify for the Employee Retention Tax Credit:
- A trade or business that was fully or partially suspended or had to reduce business hours due to a government order, OR
- An employer that had a significant decline in gross receipts, OR
- A business impacted by supply chain interruptions, OR
- A business that was started after Feb 15, 2020
If the business owner (or a married couple) owns less than 50% of the business, then those wages along with the wages of family members are likely eligible to be claimed for the ERTC credit.
We get this question quite often and unfortunately, the majority of tax professionals don’t know about this credit, the proper way to apply for it, or the correct qualification criteria. Our network of CPAs and tax experts specialize in this area of the tax code, and we have helped hundreds of small businesses apply.
No, the ERC credit is not considered income for tax purposes, but it does impact your income tax return. You must reduce any deductible wage expenses by the amount of the credit.
A taxpayer’s wage deduction for a taxable year must be reduced by the amount of the ERC related to that taxable year.
We can provide the associated documents to give your tax preparer. It is important to note that the benefits of receiving the credit should far outweigh its effect on your taxes.
The timeframe is between 2-10 months. We also partner with a financing company who can advance your refund (for a fee). RefundsPro monitors the status of your refund and alerts you when the refund is issued.
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Five Common Misconceptions about the ERC:
I was open during COVID so I won’t qualify.
I received PPP so I cannot get this (ERC) employee retention credit.
I have to pay to pay the ERC back.
I did not have a drop in revenue during the whole year so I won’t qualify.
I am a non-profit and cannot get the ERC.