The CARES Act Employee Retention Credit (ERC) is a payroll tax refund equal to 50 percent of “Qualified Wages” for all employers who qualify for this refund. This Employee Retention Credit (ERC) applies to qualified wages paid after March 12, 2020, and before January 1, 2021. The employer receives up to a $5,000 refund for the first $10,000 in wages per employee.
If qualified, the employer will continue to receive up to 70% of all qualified wages per employee for quarter 1, 2021 plus 70% of all qualified wages per employee for quarter 2, 2021 up to $7,000 of qualified wages per quarter. The maximum refund any employer can receive is $33,000 per employee for all 2020 and 2021 periods once they are properly qualified.
The ERC program was drastically updated at the end of 2020. It had gone unused & was only discussed as an afterthought. Now it should be a headline most business owners have stumbled across. As PPP weans, be prepared to hear more & more about ERC.
CPA’s know about the ERC; few know of the changes. The late change in program structure did not leave time for most CPA’s to change course. Most were geared up for the Tax Season.
Economic business and tax incentive programs like the Employee Retention Credit (ERC) have particulars that need to be considered for applying, with an accurate and maximized figure that will stand ground if audited.
Receiving an accurate, optimized and audit-ready number that is less straightforward than typical reporting alone. It is important to fully document processes and procedures, organize your records, and avoid any risk areas in advance of a potential IRS audit of the claim, which may come years later.
Issues such as normalizing pay rates, documenting qualification criteria methodology, validating other requirements, allocating healthcare expenses to the appropriate time periods, etc. The use of experienced consultants with IRS controversy experience may help to document and streamline the process which would include gathering and analyzing multiple data elements and logging required filings.
The traditional sign & send 941-X form takes anywhere between 12 to 16 weeks. E-Filing with an IRS-approved partner can cut that time in half!
No catch! Businesses that qualify are required to perform all the work up front, which is why you need SRB Capital. We know the program front to back & will have you ready for filling with just a little document search on your end.
NONE. This is a refund on payroll taxes you have already paid. The money is yours to keep and you can spend it in any way you choose.
The ERC payroll tax refund is equal to 50 percent of up to $10,000 “Qualified Wages” for each employee for 2020. The refund is up to 70 percent of $10,000 for each quarter of 2021, for each employee! The total refund cannot exceed $33,000 per employee and is in addition to any PPP funds your business has already received.
NO. The Employee Retention Credit is just that, a CREDIT. You may hear us call it a Return as well.
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