Lets talk first about Is Employee Retention Credit Taxable Income :
Our group here what do these guys doing everyone in this space is helping teach individuals about ERC and uh constantly supply a stunning breakfast and have people really learn more about the program we should head to the space where we are able to show a few of the checks that we are getting for companies and I ‘d like to see that what is this this is uh numerous millions of dollars actually Kevin numerous countless dollars so these are replicate copies of the letters that go to clients validating that the check is on the method I imply you know if you simply start to look at a few of these here I imply this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I mean it’s simply I suggest 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 validated the numbers are validated and the check is on the mail in the mail from the internal revenue service heading to the client so that’s how you’re able to track it you understand when you
get this you understand the check is chosen sure which’s when they pay so they don’t pay anything until they actually receive the cash they don’t pay bottom line Wonder trust anything till this letter is verified the check is on the method they transfer it into their checking account and they can truly rely on Wonder trust that the procedure has been ended up and the number of you believe you have actually processed given that you began this we have to do with 35 000 of these for
about six billion dollars wow so plainly they understand what they’re doing which’s what you require you need experts 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 speaking about something truly important today the staff member retention credit which most of you have never ever heard of I certainly had not become aware of it until extremely just recently and learned a lot about it since this is most likely the most affordable expense of capital for any small company anywhere
anytime if you have employees in between five and five hundred so I’ve got the expert with me this is Josh Fox he’s the founder and CEO of bottom line Concepts they’re the largest processor of these ERC credits this is a 170 page program so it’s challenging this isn’t like PPP we simply call up your bank manager and state provide 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 enjoy this program it’s disappearing very soon you got to learn everything about it let’s talk employee retention credit Josh Fox what is an ERC let’s just begin there so during the Trump Administration when President Trump was enacted they developed the cares Act and the cares act provided businesses three opportunities you had the PPP loan you had the eidl loan and you had the ERC tax refund and almost everyone it makes a huge difference right there two of them are loans and one’s a refund exactly so the ERC is a refund that’s.
remedy the money money payroll tax refund alright go on sorry I simply need to make sure we got that point I indicate that’s a huge distinction a loan versus cash money I like money cash that’s what we’re speaking about all right 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 initial cares Act is the ERC and yes Kevin it is a gorgeous hard check in the mail where you get actual 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 staff member retention credit that individual needed to be an employee so I’m going to make the Assumption this money is not for the owner not for people on the cap table not for investors it’s for staff members right you had to have owned a company however it’s based on you having W-2 workers in America not 10.99. As long as you had W-2 workers and you paid federal payroll taxes that’s why you would be qualified so you have to be on payroll in 2020 on the W-2 and you have to be on payroll for the very first six months of 2021 on the W-2 proper so there were 6 quarters the program was open well walk us through the six quarters so you had quarters two 3 and 4 of 2020 and you had quarters one 2 and three of 2021. alright so that’s how it’s measured you have to be on the W-2 throughout that period now let’s talk my preferred part money just how much can you return per staff member that was on a W-2 in those six quarters so the calculation in 2020 to be specific Kevin is 50 of the worker’s wage to an optimum of 5 thousand dollars per employee for the year of 2020 and in 2021 the numbers skyrocketed to 70 of the staff member’s income to a maximum of 7 thousand per quarter how did that happen um they just altered the rules in.
2021 versus since the turmoil of the pandemic so they wanted to even get more to keep those workers on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 up to five thousand Max and after that what occurs 21 000 Max in 2021 oh that’s how you come up with twenty 6 thousand twenty one thousand to twenty twenty one plus 5 thousand in twenty twenty that’s twenty 6 thousand dollars per staff member that is because that’s a great deal of money it is now there’s a caution here the PPP cash would need to be minimized from the twenty 6 thousand dollars so if you took PPP loan one and PPP loan two you would reduce the 26 000 so what we’re seeing on average Kevin is if you took PPP cash somewhere around ten thousand dollars an individual so let’s say hypothetically you owned a dining establishment in New York City where I’m from and you had a hundred employees and you took PPP money you would still get a million dollar in the mail from the internal revenue service so it’s substantial clearly now the big concern is why does nobody learn about this due to the fact that appearance when I initially heard about this when I initially satisfied Josh you understand I have actually got great deals of investments in lots of companies I’m a major supporter for entrepreneurship in America and make many many investments in entrepreneurs of which numerous suffered through the pandemic when I first found out about this I called BS I don’t think it since I utilize the PPP we went through the money center Banks to get it it was very easy to do we had our CEOs call the banks they got their loans which were well been worthy of and we utilized them carefully to survive during the pandemic so when I found out about this I said nah it can’t be true however when I dug around I even called to my politician pals Guv Senators they didn’t know about it I suggest that’s how you know that’s how false information is that there’s no information out there then a lot of people told me well you can’t get it since you took the PPP also not real so let’s ask Josh why does no one learn about the staff member retention credit you know what’s intriguing you’re discussing the banks Kevin since in the PPP loan procedure the federal government made it very clear that if you desired 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 process process that’s all um and here there was turmoil since keep in mind in the initial cares act you could not do both programs so if you had done PPP you might refrain from doing ERC in the original program and when they changed the law in 2021 the banks were refraining from doing ERC since it’s not alone so you’re getting a tax refund so the government never ever made it clear to any person about how to.
do this does your CFO know how to do this not truly he or she’s never ever done it in the past do the banks do it nope the banks don’t do it the payroll companies yeah a few of them are doing it as a payroll business your accountant no your accountant’s never done this before unless you have an account that went into this business and bottom line my company Kevin has stayed in business considering that 2009 and we have actually been dealing with the federal government and the state federal government to recuperate cash for Fortune 500 Fortune 1000 business so a lot of our big huge business customers have worked with bottom line to recover other government programs we have actually done sales tax and use tax joblessness tax work chance tax credits research and development tax credits unclaimed home real estate tax all of these other government programs.
The employee retention tax credit is a broad based refundable tax credit created to motivate.
employers to keep employees on their payroll. The credit is 50% of up to $10,000 in salaries paid by an.
company whose business is fully or partially suspended because of COVID-19 or whose gross receipts.
decrease by more than 50%.
Schedule.
1. The credit is available to all companies regardless of size including tax exempt organizations. There are.
just two exceptions: (1) state and city governments and their instrumentalities and (2) small.
services who take Small Business Loans.
2. To certify, the company has to satisfy one of two alternative tests. The tests are calculated 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 receipts are listed below 50% of the comparable quarter in 2019. Once the.
company’s gross invoices go above 80% of an equivalent quarter in 2019 they no longer certify.
after the end of that quarter.
Estimation of the Credit.
The quantity of the credit is 50% of the certifying earnings paid up to $10,000 in total.
It works for wages paid after March 13th and prior to December 31, 2020.
The meaning of qualifying wages differs by whether a company had, typically, basically than.
100 staff members in 2019.
Companies that concentrate on ERC filing assistance typically provide expertise and assistance to help companies browse the complex process of declaring the credit. They can offer different services, including:.
How is the employee retention credit calculated? Is Employee Retention Credit Taxable Income
Eligibility Evaluation: These business will examine your organization’s eligibility for the ERC based upon elements such as your market, revenue, and operations. If you fulfill the requirements for the credit and recognize the maximum credit amount you can claim, they can help determine.
Documents and Computation: ERC filing services will assist in collecting the required documents, such as payroll records and monetary statements, to support your claim. They will likewise help calculate the credit quantity based on qualified incomes and other qualifying expenses.
Retroactive Claim Review: If you are qualified to claim the ERC for previous quarters, these business can review your previous payroll records and financials to identify prospective chances for retroactive credits. They can help you modify prior income tax return to claim these refunds.
Filing Support: Companies concentrating on ERC filings will prepare and submit the required types and documents on your behalf. This includes finishing Kind 941 or any other required tax forms.
Compliance and Updates: ERC regulations and guidance have actually developed with time. These business remain updated with the current changes and ensure that your filings abide by the most present guidelines. If the IRS requests additional details or conducts an audit associated to your ERC claim, they can likewise supply ongoing assistance.
It is very important to research and vet any company providing ERC filing assistance to ensure their reliability and know-how. Search for recognized firms with experience in tax and payroll services, or consider connecting to trusted accounting firms or tax specialists who offer ERC filing assistance.
Bear in mind that while these business can supply valuable help, it’s constantly an excellent concept to have a basic understanding of the ERC requirements and procedure yourself. This will help you make notified decisions 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 objective of the ERC is to encourage services to keep and pay their workers during the pandemic, even if their operations have actually been affected.
Here are some key points about the ERC:.
Eligibility: The ERC is offered to qualified employers, including for-profit services, tax-exempt organizations, and certain governmental entities. To certify, employers must fulfill one of two requirements:.
The business operations were totally or partly suspended due to a government order related to COVID-19.
Business experienced a significant decrease in gross receipts. As discussed earlier, for 2021, a substantial decrease is specified as a 20% decrease in gross receipts compared to the same quarter in 2019. For 2022 and beyond, a substantial decline is specified as a 20% decrease in gross receipts compared to the very same quarter in 2019, or a 20% decrease in gross invoices compared to the right away preceding quarter.
Credit Amount: The ERC is a refundable tax credit that offsets the employer’s share of Social Security taxes. The credit amount is equal to a percentage (up to 70%) of certified incomes paid to staff members, including certain health insurance costs. The optimum credit per employee is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: At first, businesses that got an Income Defense Program (PPP) loan were not qualified for the ERC. Legislation passed in late 2020 and extended in 2021 enables businesses to declare the ERC even if they got a PPP loan. The exact same wages can not be utilized to declare both the PPP loan forgiveness and the ERC.
Retroactive Provision: The ERC has been retroactively expanded and enhanced, enabling eligible employers to claim the credit for qualified earnings paid as far back as March 13, 2020. This retroactive arrangement supplies a chance for services to modify prior-year income tax return and receive refunds.
Declaring the Credit: Companies can declare the ERC by reporting it on their work tax returns, normally Form 941. If the credit surpasses the amount of employment taxes owed, the excess can be refunded to the employer.
It is essential to note that the ERC provisions and eligibility criteria have actually evolved in time. The best strategy is to consult with a tax expert or visit the main internal revenue service site for the most detailed and current info concerning the ERC, including any current legal changes or updates.
To receive the ERC, a service should fulfill among the following requirements:.
The business operations were completely or partially suspended due to a government order related to COVID-19.
The business experienced a considerable decline in gross receipts. For 2021, a substantial decrease is specified as a 20% decrease in gross invoices compared to the same quarter in 2019. For 2022 and beyond, a substantial decline is defined as a 20% decline in gross receipts compared to the very same quarter in 2019, or a 20% decline in gross invoices compared to the right away preceding quarter.
The ERC is readily available to services of all sizes, including tax-exempt organizations, but there are some exceptions. Federal government entities and companies that got a PPP loan may have limitations on declaring the credit.
The process for declaring the ERC involves completing the necessary types and consisting of the credit on your work tax return (generally Kind 941). The exact time it requires to process the credit can differ based upon several elements, including the complexity of your company and the work of the IRS. It’s advised to seek advice from a tax professional for guidance particular to your scenario.
There are numerous business that can assist with the process of declaring the ERC. These consist of accounting firms, tax advisory services, and payroll company. Some widely known companies that offer assistance with ERC claims include ADP, Paychex, Deloitte, and Ernst & Young. It’s suggested to research and contact these companies straight to ask about their services and fees.
Please keep in mind that the info provided here is based upon basic knowledge and may not show the most recent updates or modifications to the ERC. It is necessary to speak with a tax professional or go to the official IRS website for the most accurate and up-to-date information relating to eligibility, claiming procedures, and available help.
Less than 100. The credit is based if the company had 100 or fewer staff members on average in 2019.
on salaries paid to all staff members whether they actually worked or not. In other words, even if the.
staff members worked full time and got paid for full time work, the employer still gets the credit.
Greater than 100. If the company had more than 100 employees usually in 2019, then the credit is.
enabled just for wages paid to workers who did not work throughout the calendar quarter.
In both cases, “salaries” consists of not just cash payments but likewise a portion of the cost of company.
provided healthcare. Is Employee Retention Credit Taxable Income
Payment.
Companies can be immediately reimbursed for the credit by lowering the quantity of payroll taxes they.