The rules and regulations of the government are notoriously tough to traverse, and one may even go so far as to argue that they pose a threat if a form is filled out improperly or if mistakes are made when dealing with Uncle Sam.
When rare chances and government-funded channels of help do present themselves, this prompts people and businesses to have second thoughts about taking advantage of them.
This hesitation was present while we were dealing with PPP Loans, and it is still present when we are dealing with the Employee Retention Tax Credit (ERTC). The ERTC’s retroactive deadline was originally set for January 1, 2022; however, it has been moved further back to October 1, 2021; as a result, qualifying adjustments have been implemented.
What exactly is meant by the phrase “Employee Retention Tax Credit“?
ERTC was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in order to assist businesses in maintaining their workforce and continuing to pay their employees. The ERTC provides qualified employers and businesses of a small to medium size with the opportunity to receive up to fifty percent of the wages that meet the requirements for the program between March 13 and December 31, 2020.
Employers who have been granted a loan via the Paycheck Protection Program (PPP) are still qualified for the Employer Risk Tax Credit. In the first and second quarters of 2021, a firm that is awarded the ERTC will be eligible to receive a refundable credit of up to $10,000 per employee for each of those quarters.
The National Federation of Independent Business (NFIB) reports that just 4% of owners of small businesses are knowledgeable with the ERTC program. However, despite its relative obscurity, this government assistance provides a multitude of advantages to commercial businesses.
Because employee retention is such a big problem, the government is aware that in order to maintain employees, you will still need to be able to pay them. This is because employee retention is such a hot topic. The ERTC acts as a safety net for companies, qualifying employers, and the employees of those businesses, assisting them in weathering the storms of unforeseen occurrences that have pummeled them over the course of the past several years.
“In 2020, only 8% of owners made use of ERTC, and this number increased to 10% in 2021.” — ERC Today
The question now is, how can you make the most of this government assistance? Is there a catch to this deal? What are the requirements for this position?
In this comprehensive reference to the Employee Retention Tax Credit (ERTC), we will cover all you need to know about the ERTC in 2022, including how to file for it.
Take this little test to find out whether you are eligible for the ERTC now. It will only take you 60 seconds.
Important Questions to Ask in Order to learn Additional Knowledge Regarding the Employee Retention Tax Credit
How exactly does the credit for employee retention work?
The Employee Retention Credit is a tax credit that can be refunded, and it is provided to specific businesses that meet the requirements. After the 12th of March in 2020 and before the 1st of January in 2021, some owners of businesses are entitled to a proportion of the qualifying wages that a company pays to employees. This entitlement is based on certain parameters, such as the employee cap and qualified wages.
Who is eligible to receive the credit for retaining employees?
In order to meet the requirements and become an eligible employer, you will need to be able to demonstrate that your business suffered a loss as a result of one or more of the following circumstances: During the years 2020 or 2021, your business experienced a drop in gross receipts, a partial or complete suspension of operations (which may have included restrictions on trade, the inability to travel, or restricted group gatherings), or both (a business may be eligible for one quarter and not another).
When does the cutoff point come into play for the employee retention credit?
The date of expiration for the Employee Retention Credit has been shifted from December 31, 2021 to September 30, 2021; however, you can still file retrospectively as long as you satisfy the standards for eligibility.
Do I claim for the employee retention credit as well as the PPP?
In a few words, yeah. At first, if you took out a loan under the PPP program, you were ineligible to claim the ERTC. However, the Consolidated Appropriations Act (CAA), which was approved in December of 2020, remedied that situation by making it possible for smaller businesses to take advantage of both possibilities, provided that they fulfilled the prerequisites for eligibility and complied with the rules. It is essential to keep in mind that a business cannot submit the same payroll expenditure to the PPP forgiveness application in order to receive credit for either an ERTC salary or a forgivable payroll cost.
What kinds of things can I buy with the credit for retaining employees?
Because the Employee Retention Credit functions almost exactly like a reimbursement, you won’t be able to spend the money on whatever you like, no matter how much you might want to. If you are eligible and were negatively impacted by the epidemic, you may be entitled to a tax credit that is regarded to be fully refundable. As a result, you may be eligible to receive up to fifty percent of the $10,000 in wages that each employee earns each quarter.
Could I still qualify for the credit for retaining employees?
A recovery starting business has the opportunity to submit a claim for the ERC for wages earned after the 30th of June in 2021 but before the 1st of January in 2022. You are eligible to make a claim for the ERC for previous quarters so long as you file the necessary adjusted employment tax return before the deadlines for doing so.
Should I expect to be required to make a repayment for the employee retention credit?
No. Because the ERTC is seen as a reimbursement in the form of employer credits, it is as if it were money that the government owes you; it is as if you are being rewarded for making it through these last many years as a business. Although it is referred to as a loan, there is no need that you pay it back.
In the year 2022, how much is the ERC credit?
The ERC will only cover a maximum of $10,000 in wages on a quarterly basis for each individual employee. The CAA raises the maximum allowable tax credit for earned wages to 70 percent through the end of 2021; this increase applies to some health insurance premiums as well.
When requesting a return for an employee retention credit, how long does the process take?
The most current information that has been released by the IRS indicates that individuals who have already submitted their reimbursement returns can anticipate receiving their refunds anywhere from six to ten months from the date on which the returns were submitted.
The Top 3 Most Effective Credit Services for Employee Retention
1) ERC Assistant
ERC Assistant is a service that helps companies save credit on employee retention credits by streamlining the process of onboarding new customers and reporting claims in as short as one to two weeks. Additionally, ERC Assistant protects sensitive information with its private and password-protected Client Portal. An initial ERC estimate may be obtained at no cost and with only a little amount of effort paid up front in the process.
Lastly, the team at ERC Assistant is able to provide paperwork that are ready to be filed with the IRS without contacting your payroll provider in the process.
The following are some of the reasons why utilizing this service makes it simpler to apply for the employee retention tax credit: ERC Assistant evaluates your business to determine whether or not it is eligible for the ERC Program, the amount of funding that it is appropriate for you to receive, and any further technical details that may come up throughout the course of this otherwise complicated procedure. You won’t have to stress about navigating it on your own when you have the assistance of the professionals at ERC Assistant at your side. They will direct you and lay out the processes that you need to do in order to optimize the claim for your business, as well as answer any questions on the ERC that you may have.
2) ERC Today
ERC Today is a service that helps companies evaluate their eligibility for employee retention credits. The service also completes a comprehensive analysis of the claim, provides guidance on the claiming process and documentation, offers specific program expertise that a regular CPA or payroll processor might not be well-versed in, and ensures that the entire process, from eligibility to claiming and receiving refunds, is carried out in a quick and smooth manner.
ERC The purpose of today’s meeting is to evaluate how the PPP loan will be included in your ERC, what the differences are between the 2020 and 2021 programs, and how they relate to your business. We will also discuss the aggregation rules that apply to larger employers that operate in multiple states, as well as how you should interpret executive orders from multiple states.
The following are some of the reasons why utilizing this service makes it simpler to apply for the employee retention tax credit: ERC Today is able to guide you through the process from end to finish by providing effortless data gathering (including a portal for you to upload your 941 returns, PPP loan documents, and raw payroll data), credit calculation to determine the exact value of the credit you are eligible to receive from the IRS, and assistance amending returns. ERC Today’s knowledgeable services, free consultations, 100 percent IRS compliance, minimum upfront charges, and extraordinarily high success rates have been of assistance to companies of varying sizes. There are several instances of companies operating in a wide variety of sectors that have benefited from the ERTC.
3) Aprio
The ERC specialists at Aprio are well acknowledged as thought leaders in the field of COVID relief policy. The team at Aprio uses innovative thinking to maximize your advantages while adhering to the constraints and regulations imposed by the IRS. Aprio works with other credits to boost the liquidity of your firm. This is in addition to the employee retention credit services that the company offers.
The team includes devoted ERC advisers that are in the front of educating the general public and guiding customers toward optimum COVID alleviation advantages.
The following are some of the reasons why utilizing this service makes it simpler to apply for the employee retention tax credit: The devoted ERC and PPP consultants at Aprio have experience working on both the providing and receiving ends of the relief equation. As a result, they are familiar with how to negotiate the complexity and adhere to the rules and regulations. Their team of over 50 COVID relief program professionals maintains current on the most recent news and information coming from the SBA, the Treasury, Congress, and the IRS on a consistent basis.
Where you may learn out more: Aprio
Concerning the Employee Retention Credit, Many People Also Have the Following Questions.
Why is it imperative that you submit an application for the employee retention tax credit?
A: There is a good likelihood that you require and are deserving of the employee retention tax credit if you are found to be eligible for it. Businesses in good health are essential to a thriving economy, which is why the federal government established the employee tax retention credit in the first place—to provide a hand to businesses that are struggling due to the current state of the economy. It is of the utmost significance to take advantage of the ERTC in order to reward both yourself and your business for the hardships that you have through over the previous few years.
In order to become a member of the ERC, what is the associated fee?
A: The majority of services that offer employee retention credit will charge a fee once the money have been accepted and sent to your business. The Employee Retention Tax Credit is now the greatest government stimulus program in the annals of economic history, which is a positive aspect. There is a possibility that your business might be awarded a grant of up to $26,000 for each employee.
Where can I find a tool that will assist me in calculating the possible employee retention credit that I am entitled to?
A: There are several different tools available that can assist you in calculating the possible employee retention tax credits. The most effective course of action, on the other hand, is to collaborate with a firm that provides employee retention credit in order to make certain that all rules and regulations pertaining to total credit are appropriately followed.