March 12, 2021 This is the first time in tax credit history that businesses of ALL sizes and in all industries can benefit from the same program! The Employee Retention Credit (ERC) can also be very beneficial. Th ERC tax credit is not a loan but an above-the-line, refundable payroll tax credit that offsets a business’ federal tax withholdings. This refundable payroll tax credit, capped at $33,000 per employee, is a significant opportunity to infuse cash quickly into your business. Table of Contents ERC Tax Credit Eligibility Understanding the eligibility criteria for the Employee Retention Credit is crucial for businesses seeking to take advantage of this opportunity. ERC tax credit eligibility hinges on the impact of the COVID-19 pandemic on business operations. Businesses that experienced a full or partial suspension of their operations due to government orders or a significant decline in gross receipts during a calendar quarter are eligible. The size of the business and the number of employees play a pivotal role in determining the extent of the credit. ERC Tax Credit Application When applying for the ERC, businesses must navigate a series of steps. After determining eligibility, the next phase involves calculating the qualified wages eligible for the credit. This calculation varies based on the business’s size and other factors. The credit is claimed on the business’s quarterly federal employment tax returns, typically using Form 941. Maintaining accurate documentation and compliance with IRS guidelines is essential for a successful claim. Given the complexities, many businesses find it beneficial to seek professional guidance. Furthermore, on March 1, 2021 the IRS released fresh guidance for employers claiming the ERC for 2020. Read the full notice here. NEXT STEPS KatzAbosch can help you create an overarching strategy that incorporates Employee Retention Credit and other tax credits and incentives to help you maximize cash flow. Our dedicated ERC consultants are well-versed in the latest guidance and can help you achieve the best-possible long-term benefit to your business. Benefit from KatzAbosch’s industry-leading tax incentives and credits expertise in ERC tax credit eligibility, a credit we’ve excelled in since its inception in 2020. With our assistance, clients have successfully claimed tens of millions of dollars in ERC refunds. Our Employee Retention Credit professionals stay up to date with the latest guidance to secure the best long-term benefits for your business. If you would like to discuss your Employee Retention Credit forgiveness strategy, please mention it to your KatzAbosch representative or contact us today. For more information on accounting services, visit: Financial Statements, Employee Benefit Plan Audits, Nontraditional Engagements, Internal Control Studies, Surprise Examinations Under SEC or State Custody Rules, or Due Diligence Services. Frequently Asked Questions About Employee Retention Credit (ERC) What is the Employee Retention Credit (ERC)? The Employee Retention Credit (ERC) is a refundable payroll tax credit designed to encourage businesses to keep employees on their payroll during the COVID-19 pandemic. Unlike a loan, this credit is an above-the-line benefit that offsets a business’s federal tax withholdings, with a $33,000 per employee cap. It’s available to businesses of all sizes across various industries. Who is eligible for the ERC Tax Credit? ERC tax credit eligibility is primarily based on the impact of the COVID-19 pandemic on a business. Eligible businesses include those that have either fully or partially suspended operations due to government orders related to COVID-19 or experienced a significant decline in gross receipts during a calendar quarter. How does a business apply for the ERC Tax Credit? To apply for the ERC, businesses must first determine their eligibility, focusing on the impact of COVID-19 on their operations and finances. The next step involves calculating the qualified wages eligible for the credit. The credit is claimed on the business’s quarterly federal employment tax returns, typically using Form 941. Maintaining accurate documentation and complying with IRS guidelines is important throughout this process. What are the key considerations for ERC Tax Credit Application? When applying for the ERC, businesses should consider the size of their business and the number of employees, as these factors influence the calculation of qualified wages. Accurate documentation and adherence to IRS guidelines are crucial for a successful application. Can KatzAbosch assist with ERC strategies? Yes, KatzAbosch offers specialized services to help businesses create strategies incorporating the and ERC, along with other tax credits and incentives. Their dedicated teams are well-versed in the latest guidance to ensure businesses achieve the best possible long-term benefits. What makes KatzAbosch a reliable choice for ERC consultation? KatzAbosch has been at the forefront of ERC consultation since its inception in 2020. Their industry-leading expertise in tax incentives and credits, particularly in ERC, has enabled clients to claim tens of millions of dollars in ERC refunds. They stay updated with the latest guidance to secure optimal long-term benefits for businesses.
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