Maximizing Your Claims For Keeping Americans Employed
The government has provided unprecedented stimulus funding, and yet
billions of dollars are not going to be claimed.
Why Choose ERTC FAST FUNDING?
We focus on maximizing the Employee Retention tax credit for small- to mid-sized business owners. We do not prepare income taxes, compile financial statements or provide attestation services.
Engage us and you can rest assured that you have the best CPA Firm to guarantee this unique opportunity to receive a large refund check by the IRS.
These are just a handful of the companies we’ve helped lately.
The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, was signed into legislation on March 27, 2020. It provided two programs to help workers stay employed: the Payroll Protection Program administered by Small Business Administration and Employee Retention Tax Credit (ERTC) administrated by the Internal Revenue Service.
PPP funds were distributed on the basis of 2.5 months of payroll. To be eligible for forgiveness, a minimum of 80 percent must be spent on payroll. Additionally, PPP funds are not taxable as revenue and you may still take deductions for the payroll covered by PPP.
ERTC credits or refunds are credits for a portion of your quarterly payroll. Each quarter has its own eligibility rules. Limitations on the amount that can be claimed per employee are also made.
Initially, employers were able to choose whether they wanted to claim ERTC credits or a PPP loan under the CARES Act.
PPP was more advantageous than ERTC in most cases for businesses (for reasons which we won’t go into here), so businesses with fewer than 500 employees received PPP Loans.
The American Rescue Plan Act of 2021 (March 11, 2021) was signed into law. It contained many modifications and extensions to existing elements of prior stimulus programs.
Here are some important modifications for business ownersr:
Businesses that have received PPP funds can now claim ERTC credits.
Businesses that qualify in 2020 may retroactively be eligible for ERTC credit.
ERTC credits were extended until 9/30/21 and had lower qualification requirements.
The per-employee ceiling on qualifying wages went up from $10,000 for 2020 to $10,000 per quarter for the first 3 Quarters of 2021.
The refundable credit amount was raised from 50% of eligible wages in 2020 to 70% in 2021.
The short answer is yes. . . ERTC can be claimed even if you have received PPP funds.
Unlike the Payroll Protection Program (administered by the Small Business Administration), there is actually no “application process” for the Employee Retention Tax Credits.
The ERTC tax credit can be claimed just like any other credit. Simply assert to the IRS that the credit is legal.
To claim a child tax credit you must indicate this fact on your Form 1020 Personal Income Tax Return.
There is a difference: When you claim an ERTC Tax Credit, you do it on your Form 941 Employer Quarterly Income Tax Filing.
For previous quarters, an amended form (the Form 941X) must be filed to lower your current quarter’s tax contributions and request a refund of excess credits. This is highly likely.
Another advantage to ERTC is that these credits can be estimated in advance of cash distribution for payroll. That way you can file a 7200 Form to get a cash advance.
Even though you feel like revenue is normal, there may be some things you want to think about before passing on this ERTC assessment.
First, even after your revenues return to “normal” by 2021, you may still be eligible for 2020 credits. This 2020 eligibility criteria was based on revenue decreases since 2019, or if you were forced to close or partially close your business due to governmental mandate.
Second, while your revenue may have returned to “normal” in Q1 2021, remember that we are comparing your Q1 2021 to Q1 2019. If 2019 was a year of growth for your business, then your revenue levels 2 years ago may have been much less than Q1 2020.
You may be eligible for Q1 2020 if your Q4 2020 revenues decreased by less than 20% over Q4 2019. There is a safe harbor provision that not many advisors know about. It means that many businesses will be eligible for $7,000 per employee in Q1 2021.
I know that this sounds too good to be true. But the government wants you to keep Americans employed as well as money flowing through our economy, so they will reward you for doing so.
Most likely you are referring the CARES Act provision that allows employers to defer deposit and payment of employer’s Social Security taxes. These deferrals have to be repaid. At least 50% must be paid by 12/31/21; the remainder by 12/31/22.
ERTC credits are NOT a deferral. These credits are used to offset wages you have already paid. They are not taxes you’ve already paid but actual wages.
These credits can be used as a way to offset future tax contributions, or you can request a refund check.
These funds will not have to ever be repaid unless you provide insufficient documentation during an audit.
Your banker/CPA, Financial Advisor or Financial Advisor could have been very helpful in obtaining your PPP funding. In effect, they were signing you up for an SBA-guaranteed Loan. Based on their PPP loans, the SBA paid administrative fees to banks. They were therefore incentivized to help you learn about the program and make sure all paperwork was in order.
The PPP was also a simple calculation compared to the ERTC. 2 1/2 times the monthly average payroll, including state unemployment taxes and health insurance.
Based on our conversations with bankers we know that they are not interested at all in being involved in your employment taxes compliance. For them, it is a liability and beyond their scope of services.
Your Payroll Service does a good job of handling the basic details of paying your employees, filing quarterly reports, and paying your employment tax.
But computing your ERTC credits requires visibility into your P&L and PPP forgiveness applications. The complex requirements surrounding eligibility and allocating ERTC credit at the employee level, as well as accounting for quarterly and annual qualifying wage gaps, are not only complicated. . . Payroll Services almost never offer this service.
Payroll Services are happy and able to provide the payroll registers required to perform the allocations. They are also happy to file the amended Form 941-X for our client.
However, that’s the extent of it.
Most wise Payroll Services ask clients to sign an indemnification waiver before submitting a Form 941.X. The Payroll Service cannot take responsibility for the accuracy and completeness of your ERTC credits.
For them to involve themselves in the intricacies of this calculation, is a liability and beyond their scope of services.
Whether your tax accountant is an EA or CPA, they will most likely only prepare Federal and State Income tax Returns. However, ERTC credits are claimed against Employment Taxes (Form 941) and cash advances through Form 71200.
Complexity of the ERTC Program is a problem unto itself. Every tax accountant we spoke to said that they are focused on keeping up-to-date with the ever-evolving income tax code and can’t become experts in the ERTC Program also.
if your tax accountant is able to determine your eligibility by quarter or year, calculate your credits and prepare contemporaneous documentation for support of an IRS audit, then you can certainly let them handle all of this.
We’re more than happy to have a second opinion if you need it.
Your Bookkeeper should have all information necessary to calculate your legal ERTC claim accurately. They will have access to your financial records, payroll registers, and PPP loan forgiveness documents.
The Million Dollar Question is. . . Do They Have the Time?
We have not yet found a bookkeeper who can do all of this, while also managing their day-to-day bookkeeping. If yours is able, you can take them up on their offer. We are happy to have a second look.
Your time investment is guaranteed to be less than 15 minutes
This could make you tens to thousands of dollars in free money.
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