Lets talk first about Is The Employee Retention Credit Taxable :
Our group here what do these people doing everybody in this room is assisting teach people about ERC and uh constantly offer a lovely breakfast and have individuals actually discover the program we ought to head to the room where we have the ability to show a few of the checks that we are getting for business and I ‘d like to see that what is this this is uh hundreds of countless dollars literally Kevin hundreds of countless dollars so these are duplicate copies of the letters that go to customers verifying that the check is on the method I indicate you know if you just begin to 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 simply I imply think about the number of real customers that went through the program yeah this is the very end this is the celebration at the end when the check is validated the numbers are confirmed 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 know when you
receive this you know the check is chosen sure and that’s when they pay so they don’t pay anything until they really get the cash they do not pay bottom line Wonder trust anything until this letter is confirmed the check is on the method they transfer it into their savings account and they can truly rely on Wonder trust that the process has been completed and the number of you believe you have actually processed because you began this we’re about 35 000 of these for
about 6 billion dollars wow so plainly they understand what they’re doing which’s what you need you need 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 Terrific here you’re at my YouTube channel we’re discussing something really essential today the staff member retention credit which most of you have never heard of I certainly hadn’t heard of it until very just recently and discovered a lot about it since this is probably the most affordable cost of capital for any small business anywhere
anytime if you have staff members between 5 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 supervisor and state give me a loan it doesn’t work there’s not a loan it’s an application and Josh is going to inform 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 love this program it’s disappearing very soon you got to discover everything about it let’s talk employee retention credit Josh Fox what is an ERC let’s simply start there so throughout the Trump Administration when President Trump was enacted they developed the cares Act and the cares act used organizations 3 chances you had the PPP loan you had the eidl loan and you had the ERC tax refund and practically everybody it makes a huge distinction right there 2 of them are loans and one’s a refund precisely so the ERC is a refund that’s.
remedy the cash cash payroll tax refund alright go on sorry I just need to make sure we got that point I indicate that’s a big difference a loan versus cash cash I like money money 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 stunning tough check in the mail where you get real cash from the internal revenue service all right so let’s speak about how it works since it seems like to me if it’s a if it’s staff member retention credit that individual had to be a worker so I’m going to make the Assumption this money is not for the owner not for people on the cap table not for shareholders it’s for staff members right you had to have actually owned a service however it’s based upon you having W-2 workers in America not 10.99. As long as you had W-2 staff members 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 three and four of 2020 and you had quarters one 2 and three of 2021. fine so that’s how it’s determined you need to be on the W-2 throughout that period now let’s talk my favorite part cash just how much can you return per worker that was on a W-2 in those six quarters so the computation in 2020 to be precise Kevin is 50 of the staff member’s income to an optimum of five thousand dollars per employee for the year of 2020 and in 2021 the numbers skyrocketed to 70 of the staff member’s salary to an optimum of 7 thousand per quarter how did that happen um they simply changed the rules in.
2021 versus due to the fact that the mayhem of the pandemic so they wanted to even get more to keep those staff members on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 as much as 5 thousand Max and then what happens 21 000 Max in 2021 oh that’s how you come up with twenty six 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 since that’s a lot of cash it is now there’s a caveat here the PPP money would have to be lowered from the twenty six thousand dollars so if you took PPP loan one and PPP loan two you would reduce the 26 000 so what we’re seeing usually Kevin is if you took PPP cash somewhere around 10 thousand dollars a person so let’s state hypothetically you owned a restaurant in New York City where I’m from and you had a hundred staff members and you took PPP money you would still get a million dollar in the mail from the internal revenue service so it’s huge certainly now the huge concern is why does no one learn about this because appearance when I initially heard about this when I first met Josh you know I’ve got great deals of financial investments in lots of companies I’m a major advocate for entrepreneurship in America and make lots of many financial investments in business owners of which lots of suffered through the pandemic when I first heard about this I called BS I do not think it due to the fact that I use the PPP we went through the cash center Banks to get it it was extremely easy to do we had our CEOs call the banks they got their loans and that were well been worthy of and we utilized them wisely to stay alive throughout the pandemic so when I heard about this I stated nah it can’t hold true but when I dug around I even called to my political leader friends Guv Senators they didn’t understand about it I suggest that’s how you know that’s how misinformation is that there’s no info out there then a lot of individuals told me well you can’t get it because you took the PPP also not true so let’s ask Josh why does no one know about the staff member retention credit you understand what’s intriguing you’re talking about the banks Kevin due to the fact that in the PPP loan procedure the federal government made it extremely clear that if you desired a PPP loan you would call Wells Fargo Citibank Bank of America any of the huge banks in our nation and they would process procedure in Canada a pre-pp loan there’s no loans in Canada by the way it’s simply process process that’s all um and here there was turmoil because remember in the initial cares act you could not do both programs so if you had actually done PPP you might not do ERC in the original program and when they changed the law in 2021 the banks were not doing ERC because it’s not alone so you’re getting a tax refund so the government never ever made it clear to anyone about how to.
do this does your CFO understand how to do this not truly she or he’s never ever done it before do the banks do it nope the banks do not do it the payroll business yeah a few of them are doing it as a payroll company your accountant no your accounting professional’s never done this prior to unless you have an account that entered into this business and bottom line my firm Kevin has actually been in business given that 2009 and we’ve been working with the federal government and the state federal government to recuperate cash for Fortune 500 Fortune 1000 business so a lot of our big big corporate clients have dealt with bottom line to recuperate other federal government programs we’ve done sales tax and use tax unemployment tax work opportunity tax credits research and development tax credits unclaimed property real estate 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 earnings paid by an.
employer whose organization is completely or partially suspended because of COVID-19 or whose gross invoices.
decline by more than 50%.
Accessibility.
1. The credit is offered to all employers no matter size including tax exempt organizations. There are.
only 2 exceptions: (1) state and city governments and their instrumentalities and (2) small.
services who take Small Business Loans.
2. To certify, the employer has to fulfill one of two alternative tests. The tests are calculated each.
calendar quarter– Either.
o the employer’s organization is completely or partially suspended by government order due to COVID-19.
during the calendar quarter or.
o the employer’s gross invoices are below 50% of the equivalent quarter in 2019. When the.
employer’s gross receipts go above 80% of a similar quarter in 2019 they no longer qualify.
after the end of that quarter.
Computation of the Credit.
The quantity of the credit is 50% of the qualifying incomes paid up to $10,000 in total.
It is effective for salaries paid after March 13th and prior to December 31, 2020.
The meaning of certifying incomes differs by whether a company had, usually, basically than.
100 employees in 2019.
Business that concentrate on ERC filing support usually supply knowledge and assistance to assist services browse the complex procedure of claiming the credit. They can provide numerous services, consisting of:.
How is the employee retention credit calculated? Is The Employee Retention Credit Taxable
Eligibility Assessment: These business will evaluate your organization’s eligibility for the ERC based upon aspects such as your market, revenue, and operations. They can help identify if you satisfy the requirements for the credit and recognize the maximum credit amount you can declare.
Documents and Estimation: ERC filing services will help in gathering the required paperwork, such as payroll records and monetary statements, to support your claim. They will also help determine the credit amount based on qualified wages and other qualifying expenses.
Retroactive Claim Evaluation: If you are eligible to declare the ERC for previous quarters, these business can review your previous payroll records and financials to recognize prospective opportunities for retroactive credits. They can help you change previous tax returns to claim these refunds.
Filing Assistance: Business specializing in ERC filings will prepare and send the necessary types and paperwork in your place. This consists of completing Form 941 or any other necessary tax return.
Compliance and Updates: ERC regulations and guidance have progressed with time. These companies remain upgraded with the latest changes and guarantee that your filings adhere to the most existing standards. If the IRS demands additional information or carries out an audit related to your ERC claim, they can likewise supply ongoing assistance.
It’s important to research study and vet any company offering ERC filing support to guarantee their reliability and proficiency. Look for recognized companies with experience in tax and payroll services, or think about connecting to relied on accounting firms or tax professionals who offer ERC filing support.
Bear in mind that while these business can provide valuable assistance, it’s constantly an excellent idea to have a basic understanding of the ERC requirements and process yourself. This will assist you make informed choices and make sure precise filings.
The Employee Retention Credit (ERC) is a refundable tax credit presented by the U.S. federal government as part of COVID-19 relief steps. The goal of the ERC is to encourage organizations to keep and pay their employees during the pandemic, even if their operations have been affected.
Here are some bottom lines about the ERC:.
Eligibility: The ERC is available to eligible companies, consisting of for-profit services, tax-exempt organizations, and specific governmental entities. To qualify, companies should satisfy one of two criteria:.
The business operations were completely or partially suspended due to a government order related to COVID-19.
The business experienced a substantial decrease in gross invoices. As pointed out earlier, for 2021, a considerable decline is defined as a 20% decrease in gross receipts compared to the same quarter in 2019. For 2022 and beyond, a substantial decrease is defined as a 20% decline in gross invoices 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 quantity amounts to a percentage (approximately 70%) of certified salaries paid to staff members, including particular health plan costs. 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 an Income Security Program (PPP) loan were not qualified for the ERC. However, legislation passed in late 2020 and extended in 2021 enables services to declare the ERC even if they received a PPP loan. The very same salaries can not be utilized to declare both the PPP loan forgiveness and the ERC.
Retroactive Arrangement: The ERC has actually been retroactively expanded and improved, allowing eligible companies to claim the credit for qualified incomes paid as far back as March 13, 2020. This retroactive provision offers an opportunity for organizations to modify prior-year income tax return and get refunds.
Declaring the Credit: Employers can claim the ERC by reporting it on their work income tax return, generally Type 941. The excess can be reimbursed to the company if the credit goes beyond the quantity of employment taxes owed.
It is essential to keep in mind that the ERC provisions and eligibility requirements have evolved over time. The very best strategy is to speak with a tax professional or check out the main IRS website for the most current and in-depth details relating to the ERC, consisting of any recent legal modifications or updates.
To get approved for the ERC, a service needs to fulfill one of the following requirements:.
The business operations were totally or partially suspended due to a government order related to COVID-19.
Business experienced a significant decrease in gross receipts. For 2021, a substantial decline is specified as a 20% decline in gross receipts compared to the same quarter in 2019. For 2022 and beyond, a significant decrease is defined as a 20% decrease in gross invoices compared to the very same quarter in 2019, or a 20% decline in gross receipts compared to the immediately preceding quarter.
The ERC is offered to services of all sizes, including tax-exempt companies, but there are some exceptions. For instance, federal government entities and companies that got a PPP loan might have constraints on declaring the credit.
The process for declaring the ERC involves finishing the required kinds and including the credit on your employment tax return (typically Type 941). The exact time it requires to process the credit can differ based upon numerous aspects, consisting of the complexity of your service and the workload of the IRS. It’s suggested to speak with a tax expert for assistance particular to your situation.
There are several business that can help with the procedure of claiming the ERC. Some well-known business that use help with ERC claims include ADP, Paychex, Deloitte, and Ernst & Young.
Please note that the details provided here is based on basic knowledge and might not reflect the most current updates or modifications to the ERC. It is essential to talk to a tax expert or check out the official IRS website for the most current and precise information regarding eligibility, claiming procedures, and readily available help.
Less than 100. If the employer had 100 or less employees usually in 2019, then the credit is based.
on salaries paid to all workers whether they in fact worked or not. In other words, even if the.
workers worked full-time and got paid for full time work, the company still gets the credit.
Greater than 100. If the employer had more than 100 employees typically in 2019, then the credit is.
enabled only for wages paid to employees who did not work throughout the calendar quarter.
In both cases, “wages” consists of not simply cash payments however also a part of the expense of company.
supplied health care. Is The Employee Retention Credit Taxable
Payment.
Companies can be immediately compensated for the credit by reducing the quantity of payroll taxes they.