Lets talk first about Employee Retention Credit 4Th Quarter 2020 :
Our group here what do these men doing everybody in this space is assisting teach individuals about ERC and uh always provide a lovely breakfast and have people truly learn about the program we must head to the room where we have the ability to show some of the checks that we are getting for companies and I wish to see that what is this this is uh hundreds of countless dollars actually Kevin numerous millions of dollars so these are replicate copies of the letters that go to clients validating that the check is on the way I suggest you know if you just start to take a look at some of these here I mean this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I imply it’s just I indicate think of the number of real customers that went through the program yeah this is the very end this is the party at the end when the check is verified the numbers are verified and the check is on the mail in the mail from the internal revenue service heading to the customer so that’s how you’re able to track it you know when you
get this you know the check is gone for sure and that’s when they pay so they do not pay anything till they actually get the cash they don’t pay bottom line Wonder trust anything till this letter is confirmed the check is on the method they deposit it into their checking account and they can really trust Wonder trust that the procedure has actually been ended up and how many you believe you’ve processed because you began this we’re about 35 000 of these for
about six billion dollars wow so plainly they understand what they’re doing which’s what you need you require specialists on the other end of the phone to process this and get it to where you get one of these that’s what matters all right Mr Fantastic here you’re at my YouTube channel we’re talking about something truly essential today the staff member retention credit which the majority of you have actually never become aware of I certainly had not heard of it till really recently and discovered a lot about it due to the fact that this is probably the lowest expense of capital for any small business anywhere
anytime if you have staff members in between 5 and five hundred so I’ve got the specialist with me this is Josh Fox he’s the creator and CEO of bottom line Principles they’re the biggest processor of these ERC credits this is a 170 page program so it’s difficult this isn’t like PPP we just call your bank supervisor and state offer me a loan it does not work there’s not a loan it’s an application and Josh is going to tell all of us about it and how to get it and why I’ve ended up being yes the Ambassador and paid spokesperson for this I like this program it’s going away soon you got to learn everything about it let’s talk employee retention credit Josh Fox what is an ERC let’s just start there so during the Trump Administration when President Trump was enacted they created the cares Act and the cares act used businesses 3 chances you had the PPP loan you had the eidl loan and you had the ERC tax refund and nearly everybody it makes a big difference right there two of them are loans and one’s a refund precisely so the ERC is a refund that’s.
remedy the money cash payroll tax refund okay go on sorry I just need to make certain we got that point I suggest that’s a big distinction a loan versus money cash I like cash money that’s what we’re talking about alright and the other loans are done so we’re sitting here in 2023 and the eidl is over the PPP is over and the only one left from the original cares Act is the ERC and yes Kevin it is a lovely tough check in the mail where you get real cash from the internal revenue service all right so let’s discuss how it works since it seems like to me if it’s a if it’s employee retention credit that individual had to be a worker so I’m going to make the Presumption this money is not for the owner not for people on the cap table not for shareholders it’s for employees right you needed to have owned an organization but it’s based upon you having W-2 workers in America not 10.99. so as long as you had W-2 employees and you paid federal payroll taxes that’s why you would be eligible so you need to be on payroll in 2020 on the W-2 and you have to be on payroll for the first six months of 2021 on the W-2 appropriate so there were 6 quarters the program was open well walk us through the 6 quarters so you had quarters 2 three and 4 of 2020 and you had quarters one two and three of 2021. fine so that’s how it’s measured you need to be on the W-2 throughout that period now let’s talk my preferred part money how much can you return per worker that was on a W-2 in those six quarters so the calculation in 2020 to be specific Kevin is 50 of the employee’s income to an optimum of five thousand dollars per worker for the year of 2020 and in 2021 the numbers increased to 70 of the staff member’s wage to an optimum of seven thousand per quarter how did that take place um they just changed the rules in.
2021 versus due to the fact that the turmoil of the pandemic so they wished to even get more to keep those employees on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 as much as five thousand Max and then what occurs 21 000 Max in 2021 oh that’s how you develop twenty 6 thousand twenty one thousand to twenty twenty one plus five thousand in twenty twenty that’s twenty six thousand dollars per staff member that is since that’s a great deal of money it is now there’s a caveat here the PPP cash would need to be minimized from the twenty six thousand dollars so if you took PPP loan one and PPP loan 2 you would minimize the 26 000 so what we’re seeing on average Kevin is if you took PPP cash someplace around 10 thousand dollars an individual so let’s state hypothetically you owned a dining establishment in New York City where I’m from and you had a hundred workers and you took PPP money you would still get a million dollar in the mail from the IRS so it’s substantial undoubtedly now the huge concern is why does nobody know about this since look when I first found out about this when I initially satisfied Josh you understand I have actually got lots of financial investments in great deals of business I’m a significant supporter for entrepreneurship in America and make numerous lots of financial investments in entrepreneurs of which many suffered through the pandemic when I initially heard about this I called BS I do not believe it because I use the PPP we went through the cash center Banks to get it it was very easy to do we had our CEOs call the banks they got their loans and that were well should have and we utilized them carefully to survive during the pandemic so when I heard about this I said nah it can’t hold true however when I dug around I even called to my politician pals Governor Senators they didn’t learn about it I indicate that’s how you understand that’s how false information is that there’s no information out there then a lot of people informed me well you can’t get it because you took the PPP also not real so let’s ask Josh why does nobody learn about the staff member retention credit you understand what’s intriguing you’re discussing the banks Kevin since in the PPP loan procedure the federal government made it really clear that if you wanted a PPP loan you would call Wells Fargo Citibank Bank of America any of the big banks in our country and they would process process in Canada a pre-pp loan there’s no loans in Canada by the way it’s just procedure procedure that’s all um and here there was turmoil because remember in the initial cares act you might not do both programs so if you had done PPP you could refrain from doing ERC in the initial program and when they changed the law in 2021 the banks were not doing ERC due to the fact that it’s not alone so you’re getting a tax refund so the government never made it clear to any person about how to.
do this does your CFO understand how to do this not really she or he’s never ever done it previously do the banks do it nope the banks don’t do it the payroll business yeah some of them are doing it as a payroll company your accountant no your accounting professional’s never ever done this before unless you have an account that went into this organization and bottom line my firm Kevin has stayed in business since 2009 and we have actually been working with the federal government and the state government to recuperate money for Fortune 500 Fortune 1000 companies so a lot of our big big corporate clients have actually dealt with bottom line to recover other government programs we have actually done sales tax and utilize tax unemployment tax work opportunity tax credits research and development tax credits unclaimed home property tax all of these other federal government programs.
The staff member retention tax credit is a broad based refundable tax credit created to motivate.
companies to keep workers on their payroll. The credit is 50% of approximately $10,000 in incomes paid by an.
company whose company is completely or partially suspended because of COVID-19 or whose gross invoices.
decline by more than 50%.
Schedule.
1. The credit is readily available to all companies despite size consisting of tax exempt organizations. There are.
only 2 exceptions: (1) state and city governments and their instrumentalities and (2) small.
companies who take Small company Loans.
2. To certify, the employer needs to fulfill one of two alternative tests. The tests are computed each.
calendar quarter– Either.
o the employer’s organization is fully or partly suspended by government order due to COVID-19.
during the calendar quarter or.
o the company’s gross invoices are listed below 50% of the similar quarter in 2019. As soon as the.
employer’s gross receipts go above 80% of an equivalent quarter in 2019 they no longer certify.
after completion of that quarter.
Computation of the Credit.
The amount of the credit is 50% of the qualifying earnings paid up to $10,000 in overall.
It works for salaries paid after March 13th and prior to December 31, 2020.
The definition of certifying incomes varies by whether a company had, typically, more or less than.
100 workers in 2019.
Companies that focus on ERC filing assistance typically offer knowledge and assistance to assist services navigate the intricate procedure of declaring the credit. They can offer numerous services, consisting of:.
How is the employee retention credit calculated? Employee Retention Credit 4Th Quarter 2020
Eligibility Evaluation: These companies will assess your company’s eligibility for the ERC based on factors such as your market, profits, and operations. They can help identify if you satisfy the requirements for the credit and determine the maximum credit quantity you can declare.
Documents and Estimation: ERC filing services will help in collecting the required documents, such as payroll records and monetary statements, to support your claim. They will likewise assist compute the credit quantity based upon qualified salaries and other qualifying costs.
Retroactive Claim Review: If you are eligible to claim the ERC for previous quarters, these business can review your previous payroll records and financials to determine possible opportunities for retroactive credits. They can assist you amend prior income tax return to claim these refunds.
Filing Support: Business concentrating on ERC filings will prepare and send the necessary kinds and paperwork in your place. This consists of completing Type 941 or any other required tax return.
Compliance and Updates: ERC guidelines and assistance have progressed gradually. These business stay updated with the most recent changes and guarantee that your filings adhere to the most existing guidelines. They can likewise provide continuous support if the internal revenue service demands additional information or conducts an audit related to your ERC claim.
It’s important to research study and veterinarian any company providing ERC filing help to guarantee their credibility and proficiency. Search for established firms with experience in tax and payroll services, or consider connecting to trusted accounting companies or tax professionals who use ERC filing assistance.
Keep in mind that while these business can provide important assistance, it’s always a good idea to have a fundamental understanding of the ERC requirements and process yourself. This will help you make informed choices and ensure accurate filings.
The Staff Member Retention Credit (ERC) is a refundable tax credit introduced by the U.S. government as part of COVID-19 relief procedures. The goal of the ERC is to motivate businesses to maintain and pay their employees during the pandemic, even if their operations have been impacted.
Here are some key points about the ERC:.
Eligibility: The ERC is available to qualified companies, including for-profit businesses, tax-exempt companies, and particular governmental entities. To qualify, companies should satisfy one of two criteria:.
Business operations were fully or partially suspended due to a government order related to COVID-19.
The business experienced a significant decline in gross receipts. As mentioned earlier, for 2021, a significant decrease is specified as a 20% decline in gross invoices compared to the very same quarter in 2019. For 2022 and beyond, a significant decrease is defined as a 20% decline in gross receipts compared to the exact same quarter in 2019, or a 20% decline in gross invoices compared to the immediately preceding quarter.
Credit Amount: The ERC is a refundable tax credit that offsets the company’s share of Social Security taxes. The credit amount amounts to a percentage (approximately 70%) of qualified salaries paid to staff members, consisting of particular health insurance expenses. The optimum credit per worker is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: At first, businesses that received a Paycheck Defense Program (PPP) loan were not qualified for the ERC. Legislation passed in late 2020 and extended in 2021 allows companies to declare the ERC even if they got a PPP loan. Nevertheless, the same incomes can not be used to claim both the PPP loan forgiveness and the ERC.
Retroactive Arrangement: The ERC has been retroactively expanded and improved, enabling qualified employers to declare the credit for certified wages paid as far back as March 13, 2020. This retroactive provision offers an opportunity for organizations to modify prior-year income tax return and receive refunds.
Claiming the Credit: Companies can claim the ERC by reporting it on their work income tax return, normally Kind 941. The excess can be reimbursed to the company if the credit surpasses the quantity of employment taxes owed.
It is essential to note that the ERC arrangements and eligibility requirements have developed with time. The best strategy is to seek advice from a tax professional or visit the official internal revenue service site for the most comprehensive and up-to-date info concerning the ERC, consisting of any current legislative changes or updates.
To qualify for the ERC, an organization should satisfy among the following criteria:.
The business operations were fully or partially suspended due to a government order related to COVID-19.
The business experienced a substantial decrease in gross receipts. For 2021, a considerable decline is specified as a 20% decline in gross receipts compared to the very same quarter in 2019. For 2022 and beyond, a considerable decline is defined as a 20% decrease in gross receipts compared to the exact same quarter in 2019, or a 20% decrease in gross receipts compared to the immediately preceding quarter.
The ERC is available to businesses of all sizes, including tax-exempt companies, but there are some exceptions. Federal government entities and companies that got a PPP loan might have constraints on declaring the credit.
The procedure for declaring the ERC involves completing the required forms and consisting of the credit on your work income tax return (usually Type 941). The exact time it requires to process the credit can vary based on numerous elements, including the complexity of your organization and the work of the internal revenue service. It’s recommended to speak with a tax expert for guidance particular to your scenario.
There are a number of companies that can help with the procedure of claiming the ERC. Some widely known companies that use help with ERC claims consist of ADP, Paychex, Deloitte, and Ernst & Young.
Please keep in mind that the information offered here is based upon basic understanding and may not reflect the most current updates or modifications to the ERC. It is essential to talk to a tax expert or visit the main IRS site for the most up-to-date and accurate info regarding eligibility, declaring procedures, and available help.
Less than 100. If the company had 100 or fewer employees usually in 2019, then the credit is based.
on incomes paid to all workers whether they actually worked or not. In other words, even if the.
workers worked full-time and earned money for full-time work, the company still gets the credit.
Greater than 100. The credit is if the company had more than 100 employees on average in 2019.
enabled only for wages paid to employees who did not work during the calendar quarter.
In both cases, “salaries” includes not just cash payments however likewise a part of the expense of employer.
provided health care. Employee Retention Credit 4Th Quarter 2020
Payment.
Employers can be immediately compensated for the credit by decreasing the amount of payroll taxes they.