Employee Retention Tax Credit Now Available to PPP Recipients
Act Now to Have Us Begin Work On Your ERTC
Dear clients and friends,
I hope this finds you well and that 2021 promises to be a better year for us all.
I know it can seem overwhelming to keep up with all of the COVID Relief available to our small businesses. That is why we at BradyRenner CPAs are committed to staying as up to date and keeping you as informed as possible.
With that said, I want to tell you about the Employee Retention Tax Credit. This is a credit that was created with the passing of the CARES Act back in April. This credit got very little publicity because, at the time, it was unavailable to any business that received a Payroll Protection Program (PPP) loan, which most did. However, part of the new Stimulus Bill was a provision allowing those who received a PPP loan to now be eligible for this credit as well.
Here’s how it works: For any wages you paid during a period in which you were mandated by the government to be either fully or partially shut down/restricted, you are entitled to between 50% and 70% of those wages back in a payroll tax credit. There are rules and limitations so there will need to be some calculations done as to what you are entitled to.
Let me give you a quick example:
A business, as a result of Governor Hogan’s Stay at Home order, was forced to be partially shutdown from March 23rd until April 21st. They have 6 employees and paid payroll during that period of $40,267. They would be entitled to a tax credit (refund) of $20,133.50. The credit is taken by amending the June 30th 941 filing.
This is a great opportunity and we are here to help. There are two steps to this credit:
Step 1 – Determine the amount of qualifying wages and resulting tax credit, and prepare related documentation
Cost – $500
Step 2 – Prepare amended 941 for the affected quarters
Cost – $250 per quarter
We do not have to perform both the above steps. You could take the information provided from step 1 and have your payroll processor perform step 2.
Please note that the IRS averages 8-12 weeks to process amended returns so, it will be some time before you receive the refunds.
Please let me know if you think you may qualify and would like to take advantage of this tax credit, and we will begin work right away.
Questions? Ask our team at BradyRenner CPAs today >>
Matt Brady, CPA
Image credit: Unsplash @Creative Commons.