Blog – ERC Provider | Employee Retention Credit Funding

Revenue Decrease Eligibility

Thu, 06 Apr 2023 00:34:00 GMT

Discover how your business can benefit from the Employee Retention Tax Credit (ERTC) through the revenue decrease route! Join Nathan Franco, the managing partner at ERC-Funding.com, as he breaks down the ins and outs of ERTC eligibility, revealing essential tips and strategies to maximize your tax relief.

The post Revenue Decrease Eligibility appeared first on ERC Funding .

Employee Retention Tax Credit for Nonprofits

Wed, 05 Apr 2023 01:29:00 GMT

The COVID-19 pandemic has had a significant impact on the global economy, and nonprofits are no exception. To help mitigate the impact of the pandemic on nonprofits and their employees, the US government introduced the Employee Retention Tax Credit (ERTC) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020.

The ERTC is designed to incentivize employers to keep their employees on payroll during the pandemic by providing a refund of up to $26,000 per employee. Nonprofits are eligible for this tax credit, provided they meet certain criteria. In this blog post, we will discuss the ERTC in detail, including the eligibility criteria and how nonprofits can claim the tax credit.

Eligibility Criteria for Nonprofits

To be eligible for the Employee Retention Tax Credit (ERTC), the organization must have experienced one of the following three events:

If a nonprofit meets any of these criteria, it can claim the ERTC for each quarter in 2020 and 2021 that one of these occurred.

How to Calculate the ERTC for Nonprofits

The ERTC is calculated the same way for a nonprofit organization as a for-profit organization. However, since there are no owners of a non-profit organization, there are no W-2 employees that will need to be excluded from ERC.

How to Claim the ERTC for Nonprofits

The ERTC, is a very complicated program with many nuances and details that are important to take into consideration. Therefore, it is advisable to use an expert consultant in order to ensure that it is completed properly and within all the IRS’ guidelines.

You can contact our team today to confirm your eligibility and begin the filing process.

The post Employee Retention Tax Credit for Nonprofits appeared first on ERC Funding .

Multiple SBA Loans: Can You Apply For an SBA Loan Twice? - SmartBiz Loans

Tue, 04 Apr 2023 22:07:00 GMT

Learn About the Employee Retention Credit (ERC)

Mon, 03 Apr 2023 17:43:00 GMT

“The ERC offers a welcome cash infusion as owners struggle with inflation, rising interest rates, and tight labor markets.”

A Guide to the Annual Review For Your Small Business

Thu, 30 Mar 2023 10:30:00 GMT

Through annual reviews, small business owners may reflect on their company’s achievements, assess and acknowledge their team members’ value, and plan for the road ahead. A good review may be able to help a small business take stock of its biggest assets and strategize around its liabilities. Keep reading to learn more about annual reviews for small businesses – and how you might be able to use them to fuel your company’s success.

We Transitioned to Remote Working During COVID. Am I Eligible?

Thu, 30 Mar 2023 02:29:00 GMT

Telework. Remote working. Work from home. And now, Return to Office. These are all hot-button topics in the news of human resources and business operations we’re seeing every day since the advent of the COVID crisis.

Some CEOs are making big headlines out of their demands for their employees to return to the office. Others are calling themselves disrupters for their new thinking on the matter, allowing all but the absolutely necessary staff to work remotely or from home, or from wherever they choose.

And how businesses are dealing with that spectrum or dealt with that spectrum since March 2020, is a question that is having a clear impact on whether or how they apply for the ERC credit under the CARES Act, a federal law passed to help, specifically small businesses deal with the sometimes existential threat of the pandemic.

What you need to know
The questions are wide and varied, but in order of priority, here’s a list of questions and answers that should help you as you start to navigate the ERC application process.

What is the ERC credit?
The ERC program was created as a part of the federal government’s CARES act, a response to the business and financial stresses caused by the COVID-19 response. As businesses were forced to close and partially close for safety reasons, the ERC program has enabled businesses that remained open and employing people to reclaim a tax credit of up to $26,000 per W2 employee.

Who’s eligible for it?
There are three different ways to qualify. First, any American business that experienced a precipitous drop in gross receipts in 2020, 2021, and/or 2022 compared to the same quarter in 2019 can qualify based on revenue reduction. Second, businesses can qualify based on supply chain disruptions caused by government orders that impacted their businesses by more than 10 percent. Thirdly, if your company experienced partial shutdown impacts from things like travel restrictions, reduction in capacity, or reduction in hours, you may qualify.

Is my company too big to qualify?

The ERC is designed to help those small businesses who kept their staffs on payroll during the toughest times of the COVID crisis. Small employers are those with fewer than 100 employees in 2020 and fewer than 500 employees in 2021. Larger employers normally do not qualify.

What if I sent my employees off to work from home – or otherwise remotely – during the pandemic?
If you had a reduction in gross receipts, as compared to 2019, of 50% during 2020 or 20% during 2021, where your employees worked during the pandemic is irrelevant to your eligibility for the ERC credit. If you were able to transfer all of your business to remote working and, at the same time, continue to earn the same kind of revenue, you likely will not qualify.

What if we worked remotely and were still impacted by COVID restrictions?

If you allowed your employees to work remotely and you experienced other impacts of COVID shutdowns due to things like cancelled tradeshows, reduction in capacity or reduction in the services you were able to offer, you may still qualify. It’s always worth a conversation with an ERC specialist to learn how the ERC rules may apply to your business.

What about my part-timers?
The ERC credit is designed to incentivize keeping your personnel on payroll, and this does include part time workers. The wages you paid to your part-time W-2 employees will count toward your calculation and may help you qualify for a higher amount of credit.

Can I handle my ERC application myself?
We regularly hear from clients that their in-house tax experts or contract CPA firms recommend working with ERC Specialists rather than attempting to handle their applications in-house because the details and nuances are very complex. The application process is well-documented and available online, but the CARES Act has evolved over time, and many of the details are challenging to navigate unless you have specific experience.

The post We Transitioned to Remote Working During COVID. Am I Eligible? appeared first on ERC Specialists .

Don’t Let a Shutdown Close Your Doors for Good

Thu, 30 Mar 2023 02:03:00 GMT

Did you experience a full or partial shutdown during the height of the COVID-19 crisis? If it impacted your business substantially, as it did so many other businesses in almost every industry in America, you may be eligible for the Employment Retention Credit (ERC). That is, a reduction of your tax obligation – a credit – of up to $26,000 per W2 employee direct from the IRS.

If you’re not already familiar, the ERC program was created as a part of the federal government’s CARES Act, a response to the business and financial stresses caused by the COVID-19 response. As businesses were forced to close and partially close for safety reasons, the ERC program has enabled businesses that continued employing people to reclaim credit of up to $26,000 per W-2 employee.

The so-called shutdown orders put into place for safety at the time are just one aspect of the things you need to consider as you investigate the ERC. There are basically two types of shutdowns you need to think about:

Full Shutdown – these are the orders at all different levels of government that mandated certain businesses and public spaces shut their doors until further notice.

Partial Shutdown – these are shutdowns or limitations on the work businesses were able to do, such as reduction in hours, reduction in capacity, travel restrictions or issues obtaining products or supplies stemming from other businesses in their supply chain being shuttered for a time.

The Impact

The question of ERC eligibility is not quite as simple as just, “Hey, I was impacted by a government shutdown. Where’s my credit?” In fact, most applications for ERC only deal with a shutdown order as a condition of the business environment rather than an eligibility standard.

What needs to happen to establish eligibility is for a firm to maintain records showing that the business has been impacted by a level of more than ten percent. This can be proven by size or by effect, that is the impact any shutdown may have had on the business.

Test on Size

Eligibility requires that “more than a nominal” portion of your operation was interrupted by government order. That is a drop of more than ten percent of the total gross revenue compared to the same quarter in 2019 or more than ten percent fewer total employee service hours spent on a specific aspect of the business compared to the same quarter in 2019.

Test on Effect

In this version, the business muse demonstrated that the part of your business that was closed was more than ten percent of your total operation. This means that the operational responses put into effect as a direct result of the government order resulted in ten percent lower ability to provide the products and services you’d been providing before.

There are numerous methods and methodologies identified by the IRS to prove each of these issues. And once you do, you’ll have established eligibility and be able to submit your application with confidence.

A Word of Advice

Keep in mind the ERC program is new and has been changing almost constantly since it was approved and signed into law in 2020. Because of that, it is important to engage someone to help with the application who has deep experience and a practical understanding of the process.

We regularly hear from clients that their in-house tax experts or trusted CPA firms recommend working with ERC Specialists rather than attempting to handle their applications in-house because the details of the Employee Retention Credit program are so complex.

We’ve been focused on this specific program since it was passed as a part of the CARES act. As a result, it’s likely that we have navigated a situation similar to yours. We have as much experience – and success – as anyone else in the industry.

Our best advice is simple. First, be sure you understand the program requirements and how to adjust as they change. And second, be sure to utilize expert advice to handle your application.

The post Don’t Let a Shutdown Close Your Doors for Good appeared first on ERC Specialists .

What IRS Notice 2021-20 Means For Small Business Owners

Wed, 29 Mar 2023 14:00:00 GMT

The Employee Retention Credit is an excellent resource for any qualifying business that was able to keep their employees on their payroll in 2020 and/or 2021. Unlike a tax deduction, the ERC is a dollar-for-dollar tax credit that can offer serious tax relief to businesses who have been impacted by the Covid pandemic. Companies who were able to retain their employees could receive up to $26,000 per employee retained, depending on the duration of their employment.

A lot of taxpayers who are eligible for the tax credit have passed up the opportunity because of misconceptions about the ERC. Perhaps the most common misconception is that if a company received a Paycheck Protection Program (PPP) loan, they are ineligible to receive the Employee Retention Credit. While that had been true at the outset of the pandemic, the Treasury Department changed that in March of 2021, when it issued Notice 2021-20, which provided formal guidance regarding the ERC and specified that businesses who have received PPP loans are still eligible for the ERC.

The guidelines issued in Notice 2021-20 had been added to the Employee Retention Credit FAQs (frequently asked questions) section of the IRS website, but that didn’t offer the full weight of an IRS notice. While the information posted in the IRS FAQs is meant to provide clarity and certainty, an IRS notice provides greater legal authority than the information in the IRS FAQs. IRS notices are published in the Internal Revenue Service Bulletin and can be cited as a reasonable defense against a possible penalty. This offers greater defense than the information in a FAQ, which the IRS disclaims as being non-binding and lacks the substantial authority to be used in a defense against possible penalties.

In addition to ensuring that taxpayers who received PPP loans could receive the ERC moving forward, Notice 2021-20 also ensured that businesses would be able to file for the tax credit retroactively, which was especially important because so many businesses — especially small businesses — had assumed they were ineligible. Thankfully, the IRS offers some flexibility for companies that have overlooked the ERC. If your business was eligible for the ERC in 2020, you have until April 15, 2024 to file for the credit for the first, second, third, and fourth quarters of that year. Businesses who didn’t file for the Employee Retention Credit for 2021 have until April 15, 2025 to file amended payroll returns for all quarters of 2021.

Before Notice 2021-20 was issued, businesses who had received small business loans through the Paycheck Protection Program were unable to take advantage of the ERC. This changed in December of 2020 with the Consolidated Appropriations Act, which allowed businesses who’d received PPP loans to be retroactively eligible for the ERC. Notice 2021-20 took the extra step of formalizing this measure while also offering new guidance regarding how businesses can document their eligibility to receive the ERC.

Notice 2021-20 may sound like it was just a formality, but for many businesses, the policies it has instituted can make the difference between receiving and not receiving the ERC. PPP loans were a lifeline to many small businesses in 2020 and 2021, with over 11 million businesses and individuals receiving them. With the PPP restriction lifted, this resource is available to millions more businesses.

Even with more businesses being able to reap the benefits of the ERC, they must still meet the same requirements for qualification that they had to before the notice was issued. In order t T o be eligible, businesses must show that their business operations were fully or partly suspended due to a governmental order. Alternately, businesses can demonstrate their eligibility for the tax credit by showing that there has been a significant drop in gross receipts compared to the same period in 2019. For 2020, businesses must prove that there has been at least a 50 percent drop in gross receipts compared to the same period in 2019, while in 2021, businesses were only required to show that there was a 20 percent drop in gross receipts compared to the same period in 2019.

Clarifying Language

Notice 2021-20 also offered some clarity on some longstanding language in the CARES Act that had been ambiguous to taxpayers. People who read the IRS notice will see that there is a clear definition of a “nominal” decline in operations and gross receipts. While the IRS had adopted this language previously, it was never explicitly defined until the issuance of Notice 2021-20, which specified that a “nominal” decline in gross receipts is less than ten percent. Similarly, a “nominal” suspension of operations would be a decline of less than ten percent in employee hours compared to the same period.

Why Is Working with Us the Best Way to Receive Your Credit?

At Stenson Tamaddon, our proprietary technology will determine the value of your tax credit down to the penny. With tax regulations changing, it’s difficult to know how to maximize the benefits of the R&D tax credit. In fact, it’s not uncommon for tax specialists to have their own questions or uncertainties about tax credits. When you work with us, we can guide you through the process of claiming your credit, ensuring that you provide all of the necessary documentation to maximize your credit. Even more importantly, Stenson Tamaddon is committed to compliance, which means that all of our communications and record reporting conform to IRS guidelines. By making compliance a priority, we can minimize the potential for miscalculations or additional costs. Beyond that, in the event of an IRS audit, our panel of outside legal and tax professionals will support your business and defend your claim.

Contact Stenson Tamaddon today to learn more about how the Research and Development tax credit can improve your company’s bottom line.

The post What IRS Notice 2021-20 Means For Small Business Owners first appeared on Stentam .

The post What IRS Notice 2021-20 Means For Small Business Owners appeared first on Stentam .

Omega Named #1 Best ERC Provider for ERC Refunds

Tue, 28 Mar 2023 23:09:00 GMT

Merchant Maverick chooses Omega for top customer care and ERC bridge loan services

IRVINE, Calif., March 28, 2023 – Omega Accounting Solutions was recently named the #1 Best ERC Provider for Getting Your ERC Funds by Merchant Maverick, a small business comparison and review site. Providing business owners with accurate, unbiased reviews in the financial services space, Merchant Maverick has given Omega the top slot: Best Provider for Fast ERC Filing in recognition of their ability to make it easy for businesses to claim their tax refund .

“The Omega team is honored to receive the number one spot on Merchant Maverick’s list of the best ERC Providers,” said Jay Woods, founder and president of Omega Accounting Solutions. “Merchant Maverick’s commitment to financial services transparency for entrepreneurs and business owners aligns well with our own desire to empower our clients with analytics, business intelligence and comprehensive data for more responsible and sustained growth.”

Best ERC Provider Also Offers ERC Advance Funding

Merchant Maverick spotlights Omega’s fast processing times and excellent customer support. They also discussed the benefits of Omega Accounting Solutions’ newest division, Omega Funding Solutions (OFS), a third-party lender offering short-term ERC bridge loans to those organizations anticipating ERC refunds. Whether borrowers are current Omega Accounting Solutions’ ERC clients, have not yet filed for the ERC, or have filed with other processors, OFS helps small and mid-sized businesses anywhere in the U.S. get the cash they need to fund working capital, purchase new equipment or expand their businesses while they wait for their government refund.

About The Employee Retention Credit (ERC)

During the pandemic, the federal government passed powerful tax credits like the ERC to aid small- and mid-sized businesses . The ERC provides qualified businesses with a tax refund on previous overpayment of taxes during the crisis, allowing them to fund reinvestment in the business, pay employees and keep their doors open.

ABOUT OMEGA ACCOUNTING SOLUTIONS

Omega Accounting Solutions is an accounting and data firm that empowers small businesses to make informed decisions through powerful accounting, advanced analytics and tax credit expertise. The Irvine, Calif., firm founded by Jay Woods in 2007 works with CFOs, controllers, accountants and software developers to collect, integrate, analyze and present essential data that empower healthy operation and growth in businesses of all sizes. Omega’s tax credit division has specially trained teams to help businesses claim the Employee Retention Credit (ERC) and Research & Development tax credit. In 2022, Omega introduced a new funding division, Omega Funding Solutions (OFS), a third-party lender offering short-term bridge loans to those organizations anticipating ERC refunds. For further information, visit omega-accounting.com to learn more about the best ERC provider, according to Merchant Maverick.

The post Omega Named #1 Best ERC Provider for ERC Refunds appeared first on Omega Accounting Solutions .

Is the ERC Taxable Income?

Tue, 28 Mar 2023 14:00:00 GMT

The Employee Retention Credit, or ERC, has offered relief to tens of thousands of businesses that were impacted by the pandemic. Businesses have been able to qualify for the credit by establishing their eligibility in one of two ways. The first way to establish eligibility is if the business was subject to a governmental order to fully or partially suspend operations. This can be a governmental order that was issued at the federal, state, city, or other local level. The other way to establish eligibility is if your business experienced a substantial decline in gross receipts in 2020 and/or 2021. To be eligible for the ERC in 2020, a business must have a decline in gross receipts of at least fifty percent compared to the same quarter(s) in 2019. For 2021, businesses can qualify if their gross receipts are 80 percent or less than their gross receipts for the same period in 2019.

The employee retention credit is not a loan or a tax deduction. Instead, it’s a dollar-for-dollar rebate on a company’s income taxes. If a business had a minimal tax liability or owed no income tax in 2020 or 2021, the credit can still be applied toward the business’s payroll taxes.

The amount that employers can recoup through the tax credit depends on how many employees were kept on the payroll. Employers can receive up to $5,000 per employee who was kept on the payroll in 2020. Businesses can receive up to $7,000 per quarter for each employee who was kept on the payroll for each of the first three quarters of 2021. This comes to a total of $21,000 for 2021. Therefore, if an employee was kept on the payroll in 2020 and 2021, the business could receive a total tax credit of up to $26,000 per eligible employee.

Is the ERC Considered Taxable Income?

The good news is that your ERC refund is not taxable income. However, the ERC will affect what payroll deductions you can claim. Businesses that receive the ERC must reduce their payroll expense deduction by the amount of the credit. This is so that a taxpayer cannot “double dip.”

If a business is applying for the ERC retroactively using IRS Form 941-X , and they’ve already submitted their income taxes for that year, the business may need to amend their income tax return to adjust the payroll deduction in these circumstances.

We Can Help!

If you are unsure about how to file for the ERC, or if you need assistance preparing and submitting your application, we recommend working with one of our experienced tax professionals. Here at Stenson Tamaddon, our tax specialists can guide you through the process. We can also answer any questions you may have along the way, so you can feel confident about the accuracy and completeness of your filing. With our help, you can feel confident about your employment disallowance and the accuracy of your company’s reporting. Don’t miss out on potential savings –  schedule a meeting  with a tax specialist now.

The post Is the ERC Taxable Income? first appeared on Stentam .

The post Is the ERC Taxable Income? appeared first on Stentam .

How Does Contactless Payment Work? And How to Make the Shift

Tue, 28 Mar 2023 10:00:00 GMT

Contactless payments provide shoppers with a faster, easier checkout experience. But some small business owners – maybe including you – are skeptical about making the transition. Maybe you don’t fully understand or trust this new technology, but there’s information available to you. Below, find more information to help address the question of how contactless payment works – and tips to help make the transition yourself.

Employee Retention Credit for Family Members: Detailed Guide

Mon, 27 Mar 2023 14:00:00 GMT

Some government benefit initiatives extend to members of a family. For example, some spouses or dependent children of service members or veterans qualify for benefits like healthcare, life insurance or education assistance to help pay for school or training. Similarly, a special provision of the post-9/11 GI Bill enables some military members to share their remaining GI Bill (education) benefits with immediate family members.

The employee retention tax credit has benefited many business owners. However, there are limits in this program for majority business owners and their family members. A majority owner is defined as any individual or company that owns or controls more than half of a company’s shares.

Under the employee retention credit guidelines, wages paid to individuals who own more than 50% (majority owner) of the business are generally not counted as qualified for credit consideration. Similarly, wages paid to certain family members of the majority owner are generally not qualified. The IRS considers these family members to be constructive owners of the business and disqualifies their wages as if they were an owner themselves.

Who are Considered Family Members for Employee Retention Credit Purposes?

According to the Internal Revenue Service (IRS), wages paid to individuals who are related to a majority owner of the employer are not eligible for the retention credit. IRS guidance under Sec. 152(d)(2) defines related individuals for this purpose as:

What About Wages Paid to a Majority Owner and His/Her Spouse?

Recent guidance from the IRS on this issue came in August 2021. Notice 2021-49 states that wages paid to a majority owner and his or her spouse are generally not eligible for the employee retention credit. Interestingly, if a majority owner has no siblings or lineal descendants, then neither the majority owner nor the spouse is considered a related individual for ERC purposes. Simply put, a majority owner may be eligible for this tax credit if he or she has no family.

Things to Consider When Calculating the Employee Retention Credit for Family Members

There are a few mistakes employers commonly make when calculating their employee retention credit . Here are a few things to avoid when filing your claim:

Conclusion

Wages paid to majority owners and individuals in his or her family must be carefully considered when filing claims for the employee retention credit. Complications with constructive ownership rules, familial relationships, majority ownership, owner wages, profits interests and direct and indirect ownership can make compliance difficult without qualified professional help.

Understanding how wages paid to family members affects your ERC is an important part of following IRS guidelines for the program. Just like with any refundable tax credit, you want to ensure you have all your ducks in a row to avoid delays.

Stenson Tamaddon was established to aid business owners in fully leveraging available tax credits to support economic growth and innovation. Our tax credit-focused technology supports our clients’ success by maximizing return on investment (ROI) and making filing easy, while ensuring compliance . Contact us on our website or by calling 888-375-1000 to learn how we can serve you!

FAQs

Are Spouses Eligible for Employee Retention Credit?

It depends. Wages paid to the spouse of a majority owner are generally not eligible for the employee retention credit. Certain exceptions apply if the owner and his or her spouse have no other family members as defined in section 267(c)(4) of the Code.

Are Family Members Excluded From Claiming the Employee Retention Credit?

Yes. Related individuals of a qualifying employer are excluded from claiming the employee retention credit. Related individuals are listed in Sec. 152(d)(2) of the Internal Revenue Code.

How Many Employees Must You Have to Qualify for the ERC?

Both small and large employers can claim the ERC as long as they otherwise qualify. There are different rules for small or large employers, so the distinction is important.

For ERC claims related to wages paid in 2021, large employers are defined as those that had an average of over 500 full time employees (FTEs) in the base year of 2019. For ERC claims related to wages paid in 2020, large employers are defined as those with over 100 FTEs in the same base year 2019.

For large employers, wages can only be included as qualified if the employee was paid but did not actually work. This limitation can severely limit the ability to claim the ERC for large employers.

The post Employee Retention Credit for Family Members: Detailed Guide first appeared on Stentam .

The post Employee Retention Credit for Family Members: Detailed Guide appeared first on Stentam .

[Explained] Nonrefundable Portion of Employee Retention Credit

Thu, 23 Mar 2023 13:00:00 GMT

Businesses that retained and paid employees during the COVID-19 pandemic may still qualify for tax refunds by claiming the Employee Retention Credit (ERC). It’s possible because there is still time to analyze payroll records for qualifying wages paid to employees in 2020 and 2021. Even if you as an employer already filed tax returns for those periods, you should be able to claim the credit by filing amended payroll tax returns using Form 941-X.

Introduction to the Employee Retention Credit

What exactly is the employee retention credit? It is a partially refundable tax credit for businesses that continued to pay their workforce while financially impacted by the COVID-19 pandemic. Some businesses may qualify to claim the credit as a result of their significant decline in gross receipts from March 13, 2020, to September 30, 2021. Even profitable businesses that were adversely affected by the COVID-19 pandemic restrictions may still be eligible for this refundable credit, which can generate refunds of 50 to 70 percent of qualified wages and health insurance costs paid in a qualified period.

Eligible employers are allowed to claim the credit either by filing an original Form 941 employment tax return. Or, if they neglected to claim the credit, they have the option to file an amended Form 941-X for a qualifying period. The ERC is available for periods early as the first quarter of 2020 and as recent as the fourth quarter of 2021 – with some restrictions.

The ERC was first enacted under the CARES Act in March 2020 to serve as an incentive for employers to keep their workforce employed and covered by health insurance during the COVID-19 pandemic. The ERC was expanded through the Relief Act and American Rescue Plan Act of 2021 and again by the Infrastructure Investment and Jobs Act. The credit was extended to allow credits of as much as $21,000 per employee in 2021 for certain employers. What was previously an attractive incentive for some companies became an essential opportunity for a significant number of businesses.

What is the Nonrefundable Portion of the Employee Retention Credit?

For starters, it’s important to explain what a nonrefundable credit is. Essentially, a nonrefundable credit cannot generate a refund by reducing a tax liability below zero. It can reduce a tax liability but stops once the tax is eliminated and cannot exceed the amount of tax you owed before applying the credit.

The ERC’s nonrefundable portion generally represents the employer’s share of certain payroll taxes, which may include those from either Social Security or Medicare – depending on the period of the claim. For wages paid after March 12, 2020 and before July 1, 2021, the nonrefundable portion is based on the employer’s 6.2 percent share of Social Security taxes. For wages paid after June 30, 2021 and before January 1, 2022, that portion is based on the employer’s 1.45 percent share of Medicare taxes. The nonrefundable portion of the ERC must be utilized first, thereby reducing the employer’s applicable share of tax – but not below zero.

If My Employee Retention Credit Exceeds My Tax, Do I Miss Out?

No. Employers with an ERC exceeding their applicable tax share can still benefit from the full credit. The amount of ERC in excess of the nonrefundable portion is generally calculated as their refundable portion. Unlike the nonrefundable portion, the refundable part of the ERC can reduce an employer’s total tax liability below zero. Therefore, an employer claiming the ERC on Form 941-X will likely generate a tax refund larger than the amount actually paid or assessed for a qualified period.

Conclusion

When utilized, the employee retention tax credit can be a big financial boost to employers and their employees. If you’re a qualified employer, you should take advantage of this tax benefit while you still can.

The post [Explained] Nonrefundable Portion of Employee Retention Credit first appeared on Stentam .

The post [Explained] Nonrefundable Portion of Employee Retention Credit appeared first on Stentam .

How a Quarterly Goal-Setting Template Can Track Business Success

Wed, 22 Mar 2023 11:15:00 GMT

Great goal-setting processes may help you and your team focus, be more productive, and stay engaged and motivated. Annual goals are typically great for business owners and management, but your employees may fare better with related short-term goals that more clearly lay out tasks and timelines. This can include weekly goals, monthly goals, and quarterly goals. Below is a sample quarterly goal-setting template and guide.

How to Check F941 Refund [Find out]

Tue, 21 Mar 2023 15:58:00 GMT

There are many things more enjoyable than paying taxes, especially if you’re a business owner. Failing to do so, however, can be costly and get you in a lot of trouble.

Although some initiatives in 2020 and 2021 from the United States government were designed to help businesses deal with the financial strain from the COVID-19 pandemic, applying for them can be complex and confusing. Perhaps you’ve already found that out after trying to claim your employee retention tax credit . Does Form 941 sound familiar?

What Does Form 941 Have to Do With the Employee Retention Tax Credit?

Employers use Form 941 from the Internal Revenue Service (IRS) for two primary reasons: to report income taxes, Social Security tax or Medicare tax withheld from employees’ paychecks and to pay their portion of Social Security or Medicare tax. Most individuals or businesses that pay wages to an employee are required to file a Form 941 every quarter – even if there aren’t employees during some of them. Exceptions include seasonal business employers, employers of household employees and employers of farm employees.

Each Form 941 you file reports the total amount of tax you withheld during that specific quarter. The four quarterly filing deadlines are April 30, July 31, October 31 and January 31.

Form 941 has been in the news more over the past few months because some employers are amending their Form 941 to get a retroactive refund of a COVID-19 payroll tax credit. That credit, known as the employee retention tax credit , was introduced through the Coronavirus Aid, Relief and Economic Security (CARES) Act. A refundable and non-refundable tax credit that businesses can claim on qualified wages, including some health insurance costs, paid to employees, the goal of the employee retention credit (ERC) was to encourage eligible employers to keep their employees on the payroll during the COVID-19 outbreak.

The advantage for employers who have already claimed the employee retention credit on their initial payroll taxes is that they had the opportunity to utilize it to offset their payroll deposits. If you’re an eligible employer who didn’t yet claim the employee retention credit on your 2020 and 2021 Form 941, however, you can now claim a refund.

How Do I File for the Payroll Tax Credit Using Form 941?

Getting a refund doesn’t occur automatically. If your business qualifies for the employee retention credit refund, you’ll have to amend your filed Forms 941 (payroll tax forms ).

To start, download Form 941-X from the Internal Revenue Service website. Again, you must file Form 941-X for each calendar quarter in which you wish to claim the employee retention credit refund. So, if you’re filing for each of the last three quarters in 2020 and each of the first three quarters in 2021, you’ll use six separate forms. You must submit Form 941-X within three years of the filing deadline for your original Form 941.

On Form 941-X, submit your qualified wages paid, including any applicable healthcare costs. You can copy the information you use for this form – quarterly wages paid and deposits made – from your original Form 941. Revise any errors you previously made.

Next, download the worksheets you need to calculate your Form 941 tax credit. Note that you might also be able to credit for paying qualified family and sick leave wages.

Here’s a list of the primary worksheets included in the IRS’ instructions for Form 941-X:

Once you’ve completed and entered these calculations for your F941 refund, make sure you don’t forget to submit the date you discovered the errors when you file an amended Form 941.

Print paper copies of your amended returns – e-filing is not available for amended Form 941. If you live in one of the following states, mail them to Department of the Treasury, Internal Revenue Service, Cincinnati, OH, 45999-0005 :

Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Wisconsin

If you live in one of these states, mail them to Department of the Treasury, Internal Revenue Service, Ogden, Utah, 84201-0005 :

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming

Again, you must submit Form 941-X within three years of the filing deadline for your original Form 941.

How Do I Find Out the Status of My ERC Refund Check?

You must call the IRS phone number at (800) 829-4933. Have your employer ID number, Social Security number and tax return information readily available.

Conclusion

It’s not too late for you to file for your ERC refund, but don’t wait too long and miss out on the credit! IRS processes and forms often are confusing, but we’re here to help.

At Stenson Tamaddon, we’ve handled thousands of refund requests, including those for employee retention credits, the Paycheck Protection Program and more. Our proprietary technology enables us to prioritize compliance – helping you maximize the amount of your business’s credit — all while minimizing risk. By filing with us, you can rest easy knowing that your information will be handled with care and strict compliance.

Check out our blog for information about this and other tax issues, including ERC 101: Does the Employee Retention Credit need to be paid back?

FAQs

How Long Does It Take to Get a 941 Refund?

IRS delays are not uncommon. However, the agency is experiencing even more setbacks due to the COVID-19 pandemic. According to the IRS website, service delays include:

If your return status is unclear, you’re not alone. Backlogs at IRS submission processing centers have resulted in some businesses waiting 6-9 months – and sometimes longer – for their refund.

What is the Employee Retention Credit (ERC)?

Introduced through CARES Act, the Employee Retention Tax Credit was established to encourage eligible employers to keep their employees on the payroll during the COVID-19 outbreak. It’s a refundable and non-refundable tax credit that businesses can claim on qualified wages, including some health insurance costs, paid to employees.

The post How to Check F941 Refund [Find out] first appeared on Stentam .

The post How to Check F941 Refund [Find out] appeared first on Stentam .

6 Loans for Retailers to Boost Your Small Business

Sat, 18 Mar 2023 13:00:00 GMT

The retail industry faces many unique challenges, such as frequent high and low seasons, and ever-changing trends. The retail industry also has quite a bit of upfront expenses, such as inventory, salaries, and real estate for retailers with physical locations. To support retailers, lenders typically offer a wide range of available loans.

ERC Deadline Update: There’s Still Time to Apply for ERC

Fri, 17 Mar 2023 23:48:00 GMT

The Employee Retention Credit deadline has remained a bit of a moving target since it was first introduced in 2020. Unfortunately, it has been moved several times due to IRS guidance and the introduction of newer legislation, confusing businesses looking to claim the credit. More recently, dubious ERC companies have broadcast pressing advertisements creating a sense of urgency surrounding the deadline to apply for ERC, which has only led to greater confusion.

Let’s clear up some of the common misconceptions regarding the ERC deadline.

Confusion Around the Employee Retention Credit Deadline

With the signing of the Infrastructure Investment and Jobs Act of November 2022, the ERC program was given a retroactive end date of September 30, 2021. It seems that for some this is when understanding the ERC deadline began to go off the rails.

However, the deadline to file for Employee Retention Credits follows typical tax amendment time limits — businesses have three years to claim ERC from the tax deadline of the year they qualify.

The Erroneous ERC Filing Deadlines

The ERC filing deadlines, as relayed by different ERC processors, vary widely. You may have seen one or more of these in your own research or experience.

When Is the Real Deadline to Apply for Employee Retention Credit?

Fortunately, we now have clarification from the IRS , and there is still time to claim your refund before the ERC tax credit deadline.

The ERC filing window closes only once for each year of the ERC: for all quarters in 2020, the deadline to apply for the ERC is April 15, 2024, and for all quarters in 2021, the deadline is April 15, 2025.

This clarification conveniently ties your ERC filing (form 941-X) into your business’ regular income tax deadline for each year.

While there is still ample time to claim ERC, the IRS generally processes claims in the order they are received, meaning the sooner you file for ERC , the sooner you can receive your refund.

Remind Me: What is the ERC?

For those in need of a refresher, the ERC is the Employee Retention Credit, a payroll tax credit that provides qualifying businesses with up to $26,000 per employee. The credit, passed by Congress during the global pandemic, was designed to help small businesses continue to pay the staff they kept working during COVID-19. Many businesses have not claimed ERC due to misconceptions and changes to ERC requirements. However, business owners can still claim ERC refunds today by amending their payroll taxes before the upcoming filing deadlines in 2024 and 2025.

Does My Business Qualify for ERC?

To qualify for the ERC , your U.S.-based company must meet these requirements:

Employee Count:

For 2020 eligibility, you must have had less than 100 full-time employees in 2019. For 2021 eligibility you must have had less than 500 full-time employees in 2019.

Business Impact:

EITHER : A government order caused you to suffer a significant decline in 2020 or 2021 quarterly revenue (gross receipts, when compared to the same quarter in 2019).

OR : Government orders had a significant impact on your overall business operations, including full or partial suspension of operations, social distancing or capacity requirements, supply chain issues, reduced operating hours, employee training issues, etc.

There’s Still Time to Claim ERC

The deadline clarification is also great news for companies that have been on the fence about filing or that were worried that they’ve missed the window. Your company can still qualify for an ERC refund worth thousands, or potentially millions, of dollars.

You Don’t Have to Wait for Your ERC Refund

Omega Funding Solutions (OFS), a division of Omega Accounting Solutions, is ready to help businesses like yours keep things running while you wait for the IRS to process and send out your refund. OFS offers bridge loans based on your expected ERC refund, whether or not you filed your ERC with Omega in the first place. These fast, flexible and equitable loans let you reinvest in your company now—and you can get approval in just three days, with nothing due upfront.

Don’t Wait Until the ERC Deadline — Claim Yours Today

While there is still time to claim your refund ahead of the ERC deadlines, you should not wait for the deadlines to approach. Applying for ERC credits can be a time-consuming process. Depending on your route to qualification and your timely submission of key documents, it can occasionally take months to build an ERC claim. Once your tax amendment is submitted, the IRS generally takes up to six months to process it, and up to nine months to deliver your refund check.

The good news is that you can receive your money faster by getting started today. Business owners who need their refund should start their ERC claim as soon as possible.

The ERC is already a great opportunity for hardworking small businesses to recoup some of the money lost during the pandemic. Now, you have almost another year to file your amended tax form 941-X. Understanding your eligibility, deadline and advanced funding options can help you claim the credit and get the financial assistance you need when you need it.

If you would like additional help understanding elements of the ERC, or would like to talk with an ERC specialist, reach out to Omega today .

The post ERC Deadline Update: There’s Still Time to Apply for ERC appeared first on Omega Accounting Solutions .

Understanding Cost Management & 4 Techniques for Small Businesses

Fri, 17 Mar 2023 18:12:00 GMT

Every project requires a certain amount of resources to complete successfully, including capital. Estimating potential project costs helps to avoid over- or underspending on projects and produce better results. Developing a cost management plan may help you estimate how much capital you need to achieve your goals.

Qualified Wages For Employee Retention Credit [Complete Guide]

Thu, 16 Mar 2023 16:08:00 GMT

The COVID-19 pandemic was hard on business operations, especially for smaller companies. More than 4,000 small businesses closed during the first three months of the pandemic, and others had to reduce their active employment by up to 50 percent.

To help businesses across the United States deal with the repercussions of the pandemic, the government enacted legislation titled the Coronavirus Aid, Relief and Economic Security (CARES) Act. As part of it, the Employee Retention Tax Credit was established. The initiative was designed to encourage eligible employers to keep their employees on the payroll during the COVID-19 outbreak.

As a refundable and non-refundable tax credit, eligible businesses can claim it on qualified wages paid to employees. This includes some health insurance costs. How you calculate your employee retention credit varies based on the number of employees your business had in 2020 and 2021, and other factors, such as qualified wages paid with PPP loans or qualifying wages paid to owners and their relatives.

What Are Considered Qualified Wages for Employee Retention Credit?

Qualified wages include those paid by employers to employees while operations were fully or partially suspended by governmental COVID-19 orders. They also consist of wages paid while the business experienced a decline in gross receipts. What’s covered? Cash wages, both hourly and salaried, along with vacation pay and any other taxable wages. Qualified wages under the ERC program also include certain health plan expenses that are allocable to those wages.

Qualified wages under the ERC program are limited to the first $10,000 of compensation paid to any employee during a calendar year (2020) or calendar quarter (2021). They can be claimed for wages paid or incurred from March 13, 2020, through September 30, 2021.

Following is a year-by-year breakdown of what the employee retention credit offers to eligible employers:

How Do I Calculate Qualified Wages Paid for the ERC?

Calculating our ERC can be achieved by basing it on your total qualified wages paid. Again, that includes some health plan expenses. Your calculation will vary depending on how many employees your business had in 2020 and 2021. It also may be affected by wages paid with forgiven PPP loans or wages paid to owners and their relatives.

The employee retention credit equals 50% of the qualified wages for 2020. It’s 70% for 2021. Note that the maximum credit amount for 2020 is $5,000 per employee for the 2020 calendar year, and for 2021 is $7,000 per employee per quarter.

The Difference in Qualified Wages for Small and Large Employers

Small businesses have an advantage when it comes to what qualifies as wages paid under the employee retention credit. Small employers, which are considered those that had, on average per month, 500 or fewer full-time employees (FTEs) in 2019, are allowed the ERC on wages paid to employees. This is for wages paid January 1, 2021, through September 30, 2021 – whether or not those individuals worked — and includes qualified health plan expenses paid during an eligible quarter. For 2020, small employers were defined as companies with 100 or fewer FTEs on average per month in 2019.

Conversely, under the ERC program, large employers are considered those that averaged more than 100 full-time employees on average per month in 2019 for 2020 and those that averaged more than 500 full-time employees on average per month in 2019 for 2021. For these employers, qualified wages are typically defined as wages paid to employees who are not providing services because either the company’s operations were fully or partially suspended or there was a decline in gross receipts during qualifying quarters. Also, employers considered large under the CARES Act may qualify for non-service wages and a proportionate amount of qualified health plan costs during an eligible quarter.

Other Considerations for Qualified Wages Under the Employee Retention Credit

The ERC is similar to the Paycheck Protection Program (PPP). The PPP, however, which ended on May 31, 2021, was a forgivable loan. It provided small businesses with funds to pay up to eight weeks of payroll costs, including benefits. Funds from the PPP loan also could be used by those businesses to pay interest on mortgages, rent, and utilities.

At the start of the program, businesses that received PPP loans weren’t eligible for an employee retention credit. However, through the Consolidated Appropriations Act of 2021, also known as the Relief Act, eligible businesses that received a PPP loan can now apply for the ERC — retroactively to 2020. You can’t, though, claim the ERC for qualifying employee wages paid with funds from a forgiven PPP loan.

Claiming the ERC is beneficial for most businesses, but it might also affect your 2020 and 2021 financial statements. Your ERC should be recorded as a credit to grant income and a debit to accounts receivable (A/R). If you received your employee retention credit as an advance payment, you should credit the refundable advance liability and debit the cash.

Make sure you include disclosures in your financial statements about the accounting method/standard you chose — no matter which one you used. Why? It’ll help ensure your compliance with IRS rules and regulations.

The ERC has already ended. But, if you’re an eligible employer, you still have time to claim. How? By filing a Form 941X for relevant quarters. For 2020, the deadline to apply is April 15, 2024; for 2021, the deadline is April 15, 2025.

Conclusion

Although the employee retention tax credit is certainly beneficial for many companies, the business of claiming it properly isn’t always an easy feat. Understanding what’s considered qualified wages, which companies are eligible employers, how it’s used with the Internal Revenue Code, how it affects tax exempt organizations and recovery startup businesses, and whether it includes Medicare taxes are questions often asked.

At Stenson Tamaddon, we offer technology-enabled financial solutions that provide accurate, compliant, and hassle-free tax credit filings. We’re here to walk you through the whole process and ensure that your statement is accurate.

As a Stenson Tamaddon, you’ll receive an easy client dashboard, real-time tax credit filing status, payroll integration, and access to your dedicated tax team. Get started with us today to find out if you’re eligible for tax credits!

FAQs

Am I Considered an Eligible Employer?

Under the CARES Act of 2020, businesses eligible for ERC credits include any employer operating a trade, business, or tax-exempt organization. However, it does not apply to governments or their agencies and instrumentalities.

You are an eligible employer if your business sustained a full or partial suspension of operations limiting commerce, travel, or group meetings due to COVID-19 and orders from an appropriate governmental authority. Or if your business experienced a significant decline in gross receipts during 2020 (50% or more versus 2019) or the first three quarters of 2021 (20% or more versus 2019). If your business qualified in the third or fourth quarters of 2021 as a recovery startup business, it may also qualify for the employee tax credit.

What Documentation Do I Need for Form 941-x for My Employee Retention Credit?

Make sure you’re equipped with the following information:

How Do I Check the Status of My 941-x Refund?

To check on the status of your claim, call the IRS helpline at (800) 829-4933 . Have your employer ID number, Social Security number, and tax return information readily available.

How Long Does It Take for IRS Form 941-x to Refund?

This varies by business, but backlogs at IRS submission processing centers have resulted in some businesses waiting 6-9 months for their ERC refund check. There are more than 800 various IRS tax forms and schedules.

The post Qualified Wages For Employee Retention Credit [Complete Guide] first appeared on Stentam .

The post Qualified Wages For Employee Retention Credit [Complete Guide] appeared first on Stentam .

The ERC: A Refundable Payroll Tax Credit

Tue, 14 Mar 2023 17:19:00 GMT

It’s been almost three years since the COVID-19 outbreak hit the shores of the United States. In response to the pandemic and its effect on the country’s residents and businesses, U.S. lawmakers enacted multiple pieces of legislation, including The Coronavirus Aid, Relief and Economic Security (CARES) Act, the Families First Coronavirus Response Act (FFCRA), the Consolidated Appropriations Act (CAA), the Paycheck Protection Program (PPP), the American Rescue Plan and the Coronavirus Preparedness and Response Supplemental Appropriations Act (CPRSA).

The Employee Retention Tax Credit was introduced through the CARES Act to encourage eligible employers to keep their employees on the payroll during the COVID-19 outbreak. It’s a fully refundable tax credit that businesses can claim on qualified wages paid to employees, including some health insurance costs.

What is the Employee Retention Credit?

Under the CARES Act of 2020, businesses may be eligible for the ERC if they had employees and operated a trade or business. Most tax-exempt organizations are included. However, with limited exceptions, it does not apply to governments or their agencies and instrumentalities. A small eligible employer for 2020 is an employer that had 100 or fewer full-time (30 hours per week or more) employees on average per month in 2019, and for 2021 had 500 or fewer full-time employees on average per month in 2019.

Your business may be eligible for the ERC if its operations were fully or partially suspended by governmental COVID-19 orders limiting commerce, travel or group meetings. Or, if it had a significant decline in gross receipts during 2020 (50% or more compared to 2019) or the first three quarters of 2021 (20% or more compared to 2019). If your business started to operate on or after February 15, 2020, it may qualify to claim the ERC for the third or fourth quarter of 2021 as a recovery startup business.

Eligible businesses can retroactively claim the ERC credit for 2020 and 2021. How? By filing Internal Revenue Service (IRS) Form 941X to amend their filed returns (Form 941) for the quarters during which your business was an eligible employer. It is important to ensure that Form 941 for 2020 and 2021 was filed, received and processed by the IRS prior to filing Form 941X. Unlike Form 941, Form 941X cannot be filed electronically.

What is a Refundable Tax Credit?

Utilized to generate a federal tax refund larger than the amount of tax paid throughout the year, a refundable tax credit creates the possibility of negative federal tax liability. Basically, it not only lowers the amount of tax you owe but may even pay you above and beyond that.

Is Employee Retention Credit Taxable?

The ERC refund must be reported on the employer’s annual federal corporate income tax return. The ERC refund is subject to expense disallowance rules. This means that you’re not allowed to receive a wage deduction and a credit for the same wage expense. If you file for ERC, you must reduce deductible wage expenses by the amount of funding you get back from the IRS. Since most employers have already filed their annual income tax returns for 2020 and 2021, they must amend those returns after they claim the ERC.

Many states follow this federal approach. However, it’s important to note that the state and local income tax implications of the employee retention credit are very complicated. This is because of state tax law conformity to the Internal Revenue Code (IRC).

How is the Erc Applied Against Payroll Taxes?

The employee retention tax credit is a refundable and non-refundable quarterly tax credit. The non-refundable credit allows the government to refund the employer’s share of employment taxes (FICA and Medicare). The refundable credit is a payment from the government beyond the amount of employment taxes paid by the employer during 2020 and 2021. The credits were designed to incentivize employers to retain employees during COVID-19.

Other Considerations for the Employee Retention Credit

Initially, businesses that received PPP loans weren’t eligible for an employee retention credit. However, through the Consolidated Appropriations Act of 2021, eligible businesses that received a PPP loan can now apply for the ERC — retroactively to 2020. Note that you cannot claim the ERC for qualifying employee wages paid with funds from a forgiven PPP loan.

Although claiming the ERC is beneficial for most businesses, it also has the potential to affect their 2020 and 2021 financial statements. A company’s ERC should be recorded as a credit to grant income and a debit to accounts receivable (A/R). Businesses that received their employee retention credit as an advance payment should credit the refundable advance liability and debit the cash.

Whichever method you select for accounting for your employee retention income tax credit, make sure to include disclosures in your financial statements about the accounting method/standard you chose. This will help ensure your compliance with IRS rules and regulations.

If you’ve yet to apply for the ERC, there’s good news: you still have time. Although the employee retention credit program has already ended, an eligible employer still has time to claim it by filing a Form 941X for relevant quarters. For all four quarters in 2020, the deadline to apply is April 15, 2024; for all quarters in 2021, the deadline is April 15, 2025.

Conclusion

There’s a lot of information to comprehend about this valuable tax credit. Some companies are unsure about what constitutes wages paid, while others simply don’t know how such a payroll tax credit affects their income tax return.

At Stenson Tamaddon, we’ve assisted businesses of all sizes in filing for the employee retention credit and similar employer tax credits. We have experience collaborating with business owners to ensure they receive maximum credit for each calendar year. Partnering with us can save you both time and effort when filing your ERC, so contact us today to connect with one of our tax credit experts.

FAQ

How Long Does It Take to Receive an Employee Retention Credit Refund?

This refund process varies. Typically, though, it takes the IRS between 4 and 12 months to issue ERC refunds. Generally, smaller refunds (under $80K per qualifying quarter) process faster than larger refunds (over $80K per quarter).

What Constitutes Qualifying Businesses Under the ERC?

Under the CARES Act of 2020, businesses may be eligible for the ERC if they had employees and operated a trade or business. This includes tax-exempt organizations. However, with limited exceptions, it does not apply to governments or their agencies and instrumentalities. A small eligible employer for 2020 is an employer that had 100 or fewer full-time (30 hours per week or more) employees on average per month in 2019, and for 2021 had 500 or fewer full-time employees on average per month in 2019.

Your business may be eligible for the ERC if its operations were fully or partially suspended by governmental COVID-19 orders limiting commerce, travel or group meetings. Or, if you experienced significant declines in gross receipts during 2020 (50% or more versus 2019) or the first three quarters of 2021 (20% or more versus 2019). If your business started to operate on or after February 15, 2020, it may qualify to claim the ERC for the third or fourth quarters of 2021 as a recovery startup business.

What Wages Qualify for the Employee Retention Credit?

Qualifying wages under the ERC generally include those paid by employers to employees while operations were fully or partially suspended by governmental COVID-19 orders, or the business experienced a decline in gross receipts. What’s covered? Cash wages, both hourly and salaried, along with vacation pay and any other taxable wages. Qualifying wages under the ERC program also include certain health plan expenses that are allocable to those wages.

Under the ERC program, qualified wages are limited to the first $10,000 of compensation paid to any employee during a calendar year (2020) or calendar quarter (2021) and can be claimed for wages paid or incurred from March 13, 2020 through September 30, 2021.

This is a year-by-year breakdown of what the employee retention credit offers to eligible employers:

Does the ERC Include Medicare Taxes Paid?

Yes. The employee retention credit applies to employment taxes such as withholding, FICA and Medicare.

Can Recovery Startup Businesses Claim the ERC?

Yes. Recovery startup businesses can claim the ERC for qualified wages paid after June 30, 2021, and before January 1, 2022. According to the American Rescue Plan Act, this type of business is eligible for the ERC if it started on or after February 15, 2020, has one or more W2 employees (not including owner-operators or family members) and has annual gross income/receipts that do not exceed $1 million for the individual 2020 and 2021 tax years.

The post The ERC: A Refundable Payroll Tax Credit first appeared on Stentam .

The post The ERC: A Refundable Payroll Tax Credit appeared first on Stentam .

Are SBA Loans Taxable Income? What You Should Know - SmartBiz Loans

Tue, 14 Mar 2023 17:03:00 GMT

Choosing the Best Small Business Owner Retirement Plans and Strategies

Tue, 14 Mar 2023 09:00:00 GMT

Retirement plans for businesses may cover your employees and you. In fact, it’s generally common investment advice to open a retirement account to which both you and your team are able to contribute. There are additional steps you should consider taking as you strategize your retirement savings. Below, learn more about small business owner retirement plans and saving for retirement.

How To Fill Out 941-X For Employee Retention Credit [Stepwise Guide]

Mon, 13 Mar 2023 17:32:00 GMT

Businesses, small and large, were affected by the COVID-19 pandemic. Many had to resort to employee layoffs, while others shuttered completely.

The United States government implemented numerous initiatives to aid these businesses, including the Employee Retention Tax Credit . Introduced through the Coronavirus Aid, Relief and Economic Security Act (CARES Act), the refundable payroll tax credit was designed to encourage eligible employers to keep their employees on the payroll, even when they’re not working during the covered period due to the COVID-19 outbreak.

In March 2021, the Employee Retention Credit (ERC) was extended through the enactment of the American Rescue Plan Act (ARPA) to include all of 2021. Qualifying companies still have time to take advantage of the employee retention credit and can claim 2020 expenses until April 15, 2024. Similarly, 2021 expenses can be claimed through April 15, 2025. How? By amending their quarterly tax returns through IRS Form 941-X.

In general, Form 941-X is used by employees to file either an adjusted employment tax return or a claim for a refund or abatement. If your business is eligible for the employee retention credit, navigating the process of amending Form 941-X can be confusing – just as with most tax forms! We’re here to guide you through that process.

What is Form 941-X? A Quick Glance

Basically, Form 941-X is utilized to make corrections to Form 941. An eligible employer is required to file Form 941-X for each calendar quarter in which they wish to claim the employee retention credit. To complete the form, you’ll need to provide information on your federal income tax withholding, employment taxes, and Medicare taxes. You must submit Form 941-X within three years of the filing deadline for your previously filed Form 941.

How to Fill Out 941x for Employee Retention Credit [in-depth Guide]

By following these 14 steps, you will be able to ensure that your employee retention credit claim through Form 941-X is accurate and approved:

Conclusion

If you are unsure about how to file a Form 941-X amendment for the ERC credit or need assistance preparing and submitting your application, consider working with one of our experienced tax professionals. Here at Stenson Tamaddon, our tax specialists can guide you through the process and answer any questions you may have along the way. That way, you can feel confident about the accuracy and completeness of your amendment.

Get started with us today, so you don’t miss a cent! Also, check out our six tips for claiming the employee retention credit .

FAQs

Is My Business Eligible for Employee Retention Tax Credits?

Your business is eligible for the ERC if it sustained a full or partial suspension of operations limiting commerce, travel, or group meetings due to COVID-19 and orders from an appropriate governmental authority or experienced a significant decline in gross receipts during 2020 or the first three quarters of 2021. If your business qualified in the third or fourth quarters of 2021 as a recovery startup business, it also qualifies for the employee tax credit.

How Long Does It Take for Irs Form 941-x to Refund?

What Documentation Do I Need for Form 941-x for My Employee Retention Credit?

Make sure you’re equipped with the following information:

How Do I Check the Status of My 941-x Refund?

Once you file the employee retention credit using IRS Form 941-X, you should receive a notice from the IRS within four weeks detailing the status of your refund check. The employee retention credit (ERC) refund typically takes 6-8 weeks to process.

To check on the status of your claim, call the IRS helpline at (800) 829-4933 . Have your employer ID number, Social Security number and tax return information readily available.

What Are Qualified Wages Under the Employee Retention Tax Credit?

In general, ERC-qualified employee wages include those paid by qualifying companies to employees because operations were suspended or the business experienced a decline in gross receipts during the COVID-19 pandemic. What’s covered? Cash wages, both hourly and salaried, along with vacation pay and any other taxable wages. Wages under the ERC program also include qualified health plan expenses that are allocable to those wages.

Qualified wages paid under the ERC program are limited to the first $10,000 of compensation paid to any employee during a calendar year (2020) or calendar quarter (2021) and can be claimed for wages paid or incurred from March 13, 2020, through September 30, 2021. If your business employed an average of more than 100 full-time employees (generally 30 hours per week or more) on average per month people in 2019, you’re only able to claim qualifying wages for employees that you retained and paid for not providing services.

The post How To Fill Out 941-X For Employee Retention Credit [Stepwise Guide] first appeared on Stentam .

The post How To Fill Out 941-X For Employee Retention Credit [Stepwise Guide] appeared first on Stentam .

SBA Loan Spending Guidelines: Everything You Should Know

Fri, 10 Mar 2023 20:18:00 GMT

If you’re considering an SBA loan to fund your business, you might be wondering how exactly you can use your loan proceeds. The great news is that SBA loans cover the vast majority of purchases your business might need to make. Read on to learn more about SBA loan spending guidelines and how you may be able to use these loans to get short-term and long-term working capital.

Omega Among Inc. Magazine’s Fastest-Growing Private Companies

Mon, 06 Mar 2023 23:07:00 GMT

Omega Ranks No. 35 on Pacific Region List

IRVINE, Calif., March 6, 2023 – Inc. Magazine today revealed that Omega Accounting Solutions is No. 35 on its third annual Inc. 5000 Regionals: Pacific list, the most prestigious ranking of the fastest-growing private companies based in Alaska, Hawaii, California, Oregon, and Washington. Born of the annual Inc. 5000 franchise, this regional list represents a unique look at the most successful private companies within the Pacific economy generating sustainable growth and jobs.

Omega Credits Innovative New Offerings and Outstanding Team

“We are grateful to be honored by Inc. for our fast-paced growth and rapid expansion,” said Jay Woods, founder & president of Omega Accounting Solutions. “I am so proud of the team we have built—and continue to build. This recognition reflects the hard work and commitment of every single employee to serving the needs of our customers.”

The companies on this list show a remarkable rate of growth across all industries in the Pacific. Between 2019 and 2021, these 185 private companies had an average growth rate of 559 percent and, in 2021 alone, they added 14,536 jobs and $4.6 billion to the Pacific region’s economy. Complete results of the Inc. 5000 Regionals: Pacific, including company profiles and an interactive database that can be sorted by industry, metro area, and other criteria, can be found at inc.com/pacific.

“This year’s Inc. 5000 Regional winners represent one of the most exceptional and exciting lists of America’s off-the-charts growth companies. They’re disrupters and job creators, and all delivered an outsize impact on the economy. Remember their names and follow their lead. These are the companies you’ll be hearing about for years to come,” said Scott Omelianuk, editor-in-chief of Inc. magazine.

Omega’s growth is largely a result of the organization’s strategic integration of government tax credit services for small and medium-sized companies, particularly the Employee Retention Credit (ERC). Knowing how many small businesses struggled under the mandates and closures associated with the coronavirus, Omega committed extensive resources and staffed up the ERC processing division, helping businesses calculate, claim and file this refundable tax credit. The company has also introduced an all-new funding arm, Omega Funding Solutions, serving small business owners. Combined, these momentous achievements help Omega fulfill its mission of empowering small business owners to make better-informed decisions.

More about Inc. and the Inc. 5000 Regionals

Inc. Magazine’s Methodology 

The 2023 Inc. 5000 Regionals are ranked according to percentage revenue growth when comparing 2019 and 2021. To qualify, companies must have been founded and generating revenue by March 31, 2019. They had to be U.S.-based, privately held, for-profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2021. (Since then, a number of companies on the list have gone public or been acquired.) The minimum revenue required for 2019 is $100,000; the minimum for 2021 is $1 million. As always, Inc. reserves the right to decline applicants for subjective reasons.   

About Inc. Media

The world’s most trusted business-media brand, Inc. offers entrepreneurs the knowledge, tools, connections, and community to build great companies. Its award-winning multiplatform content reaches more than 50 million people each month across a variety of channels including websites, newsletters, social media, podcasts, and print. Its prestigious Inc. 5000 list, produced every year since 1982, analyzes company data to recognize the fastest-growing privately held businesses in the United States. The global recognition that comes with inclusion in the 5000 gives the founders of the best businesses an opportunity to engage with an exclusive community of their peers and the credibility that helps them drive sales and recruit talent. For more information, visit www.inc.com . 

About Omega Accounting Solutions

The post Omega Among Inc. Magazine’s Fastest-Growing Private Companies appeared first on Omega Accounting Solutions .

How To Track ERC Refund [Detailed Guide]

Mon, 06 Mar 2023 20:22:00 GMT

If you could procure $26 thousand per employee simply by getting some information together and filling out a tax form, would you do it? Most any employer would answer this question with an emphatic “yes!”

Some employers have been able to claim the employee retention tax credit to create a reduction in wages in the amount of the credit. Also called the employee retention credit (ERC), it’s a quarterly payroll tax credit against the employer’s share of certain payroll taxes and against wages paid to each employee. The purpose? To help qualified businesses offset the impact of retaining employees during the COVID-19 pandemic.

If your company has filed for an employee retention credit refund, you may very well still be waiting to receive it. If so, you’re not alone. At Stenson Tamaddon, we’re here to guide you through the process of tracking your refund requests, no matter your filing status.

How Do I Track My ERC Refund?

The first step in tracking your ERC refund is to make sure that it was delivered to the IRS. The IRS does not allow companies to electronically file Form 941X (amended payroll tax return), and so it is necessary to mail a Form 941X to the applicable IRS service center. The best practice is to mail the amended returns via USPS certified mail with return receipt. Most people assume delivery, but the best practice is to check the status of the package online and confirm that USPS delivered it to the IRS.

The second step is to confirm the IRS received the return and entered it into the system. To confirm receipt, call the Internal Revenue Service’s buisness helpline at (800) 829-4933 . When calling the IRS for a status update, have your federal employee identification number (EIN) and tax return information readily available.

Be aware, though, that due to a shortage of agents available to field phone calls, your on-hold time might be exceptionally lengthy. Know that there’s no 100% guarantee you’ll be able to find out all you want about your refund status from an IRS representative. And, speaking with an IRS agent won’t get you your refund status any sooner.

If the delay of your employee retention tax credit is potentially causing economic harm to your business, you have the option of contacting the Office of the Taxpayer Advocate, also referred to as the Taxpayer Advocate Service. This IRS agency helps taxpayers resolve problems that have not been resolved through normal channels.

How Long Does It Take to Get My Employee Retention Credit Refund?

Unfortunately, we don’t have much good news for you in this department. Due to the high number of filings for employee retention credits and limited IRS staff available to review these applications, the initial wait time of six to eight weeks is no longer accurate.

Some businesses that submitted claims for the employee retention tax credit have reported waiting anywhere from four to twelve months for their ERC refunds. In some cases, the delay in receiving their expected refund has been even longer. As a general rule of thumb, the IRS processes and approves small refund amounts faster than it approves larger refund amounts.

Why Are Employee Retention Credit Refunds Taking So Long?

One reason so many eligible businesses have experienced such ERC refund delays is the large amount of 941-X forms the IRS has received. As of February 8, 2023, the agency lists its total inventory of unprocessed Forms 941-X at approximately 557,000. According to the IRS, some of these forms can’t be processed until the related 941s are processed.

Another delay in employee retention credit processing time is fraudulent claims. There are marked IRS delays due to the agency reviewing large ERC credit claims – at least twice – before issuing them. The process began after a recommendation from the Treasury Inspector General for Tax Administration (TIGTA). The goal, of course, is to minimize and reduce fraudulent claims.

To help combat these fraudulent ERC claims, the IRS on October 19, 2022 issued a press release warning employers to be wary of third parties advising them to claim the Employee Retention Credit (ERC) when they may not qualify. As the IRS advised, improperly claiming the ERC could result in taxpayers being required to repay the credit – along with penalties and interest.

Yet another delay in the refund status of ERC-eligible businesses is the manual processing required for Form 941-X. Why? The IRS does not accept eFile of the 941-X form.

How Do I Contact the Irs About My Employee Retention Tax Credit?

For the specifics of your refund status, call the IRS helpline at (800) 829-4933 . As mentioned previously in this blog, you also have the option of contacting the IRS’ Taxpayer Advocate Service, which helps taxpayers resolve problems that have not been resolved through normal channels.

Conclusion

Verifying the status of your employee retention credit refund might seem even more difficult than amending Form 941 to claim the ERC . Not many people want to call the IRS! However, claiming the credit is definitely worth it – even with those multiple ERC refund delays.

If you haven’t yet taken advantage of the ERC refund, reach out to one of our associates today to learn about your business’s eligibility – before the window to retroactively file comes to a close! For more guidance on the filing process, a list of our upcoming ERC webinars is available here .

The post How To Track ERC Refund [Detailed Guide] first appeared on Stentam .

The post How To Track ERC Refund [Detailed Guide] appeared first on Stentam .

5 Advantages of the Small Business R&D Tax Credit

Fri, 03 Mar 2023 20:34:00 GMT

Small businesses have great potential to benefit from the Research and Development Tax Credit. The R&D tax credit can save small and medium-sized businesses roughly 10% of their qualified expenses — the more you spend on technical activities, the more you can save on taxes.

Qualifying for the small business R&D tax credit is easier than many decision-makers think. If your company develops prototypes, dedicates resources to process improvements, develops software, or conducts technical activities like engineering, biotech, or life sciences, you may qualify for significant tax savings.

Here are the five key benefits of the small business research and development tax credit.

1. Many Small Businesses May Be Eligible for Research Credits

Small businesses that develop or improve products are typically qualified for payroll tax credits for increasing research activities. These are commonly known to qualify for the R&D tax credit — expenditures related to prototyping, tooling, coding, software/app development, etc. What many don’t know is that the R&D credit not only applies to what you make but also to how you make it.

Research that improves manufacturing methods or technical processes can also qualify, from the production line to final assembly. Technical activity and engineering that aims to streamline production, speed up assembly, reduce waste, and utilize technology that is new to your company can likely qualify for the small business R&D tax credit, which is intended to keep these activities within the United States.

If your company is actively seeking new methods to make your processes better, faster, or less expensive, it likely qualifies for significant tax savings.

A few R&D Categories That Qualify:

2. Small Businesses Typically Save 10% on Qualified Expenditures

There is no ceiling on the money you can save through the R&D tax credit for small businesses. If your company spends several thousand or several million dollars on R&D supplies, equipment, and wages, you can still use roughly 10% of those expenses to offset your company’s taxes. Small and medium-sized businesses can utilize the credit as a dollar-for-dollar reduction in federal income tax liability.

3. Eligible Research Activities Are Simpler Than You Think

Many small business leaders believe their research activities are not eligible for the R&D credit because they haven’t made groundbreaking discoveries. That used to be true, but in the early 2000s, Congress eliminated the “Discovery Rule,” greatly expanding the pool of businesses eligible to receive the credit.

Today, you don’t have to build A.I. robots or cure cancer to qualify. Instead, your development must only be new to your company. Even if the goal of your research is to keep up with your competitors, it can likely qualify — you only need to develop or improve products, processes, or techniques. Your research activities do not have to be incredibly complicated, either. For example, a project to improve efficiency or automation could make your small business eligible for the research credit.

4. Small Businesses Can Claim Research Credits Retroactively

Companies that engaged in qualified activity in previous tax years can perform a retroactive study to document unclaimed credits, generally up to three or four years. Tax returns filed within that window can be amended for refund claims on overpaid taxes. If your small business has done research activities for several years, it is wise to investigate your credit eligibility as soon as possible, as the window to claim your refunds expires on a rolling basis.

5. Several Paths to Monetization

There are several ways to monetize the R&D credit. The first is as a tax credit against liability on the current year’s income tax return when filed. If a taxpayer has made estimated payments against this liability, they may be entitled to a refund of those payments. The second way is to refund prior years’ tax overpayments where the credit was not claimed. The third is as an offset of quarterly estimated taxes based on anticipated future credits or carryforwards. Finally, small startup businesses may be eligible to convert the income tax credit to a payroll tax credit if they satisfy the definition of a Qualified Small Business .

The R&D Credit Is for Businesses of All Sizes

The R&D credit was designed by lawmakers to encourage businesses of all sizes and industries to keep scientific and technological jobs in the USA to keep our country at the forefront of innovation. Small businesses often overlook the R&D tax credit, because it requires an additional report to be furnished to the tax preparer. This report should identify which expenses are R&D, why the business considers those expenses to be R&D, how that was determined, and which expenses were determined not to be R&D.

R&D tax credits for small businesses are easier to access than many decision-makers think. If you believe your company may conduct eligible research activities, contact a tax credit expert to help you claim the small business R&D tax credit.

Omega Accounting Solutions is a data-centric consulting firm that empowers business owners to make better-informed decisions. They build custom business intelligence tools to find fresh insights that yield action, sustain healthy operations, and promote new growth. They also specialize in helping small & mid-sized businesses utilize incentive programs to maximize cash flow. Omega’s team of Research and Development Tax Credit experts can quickly determine if your small business is eligible for research credits, calculate your credit amounts, and claim the maximum credit you qualify for.

The post 5 Advantages of the Small Business R&D Tax Credit appeared first on Omega Accounting Solutions .

Does Size Matter? For ERC Credit, It Can Mean a Big Difference

Wed, 22 Feb 2023 13:28:00 GMT

Are you a small or large employer? How do you know? Who sets the standards? And how does that impact how you think about the CARES act? And, specifically, the Employee Retention Credit (ERC) that could just net you $26,000 per W-2 employee you kept on during the pandemic?

Well, the answers to these questions are not always easy. Like any government or IRS program, the instructions can be less than straightforward, often requiring outside advice. And with the CARES Act/ERC Program, the details have developed and evolved over time.

The ERC program was created as a part of the federal government’s CARES Act, a response to the business and financial stresses caused by the COVID-19 reaction. Large and small companies were and continue to be treated differently under the emergency response law, and navigating the changes is not always easy.

For example, the definition of a large company for the program is different for 2021 than it was in 2020. Businesses averaging 100 employees in 2020 were considered “large,” while in 2021, the number went up to 500 full-time employees.

Exactly how those employees are counted is very specific and requires appropriate documentation, as noted in the step-by-step instructions in IRS Notice 2021-20 Q/A 31.

How do we count it?
According to the ERC instructions provided by the IRS, small businesses are those with fewer than 100 average employees in 2020 and 500 full-timers in 2021.

This is the formula to help determine the average full-time number of employees for comparison across 2019, 2020, and 2021:

“The term “full-time employee” means an employee who, with respect to any calendar month in 2019, had an average of at least 30 hours of service per week or 130 hours of service in the month (130 hours of service in a month is treated as the monthly equivalent of at least 30 hours of service per week), as determined in accordance with section 4980H of the Internal Revenue Code. An employer that operated its business for the entire 2019 calendar year determines the number of its full-time employees by taking the sum of the number of full-time employees in each calendar month in 2019 and dividing that number by 12.”

Clearly, the number of employees is not linked to specific people as much as to slots or headcount maintained throughout the pandemic. At the same time,e a business was forced to close or limit hours/availability due to COVID-19 safety restrictions. Since the ERC was designed to incentivize businesses to keep people on their payroll during the COVID-19 crisis, eligibility is directly related to the number of employees maintained during the pandemic.

Big or Small: Why it Matters
Because of the way businesses are assessed and the impact of the pandemic on different types of businesses of various sizes, for ERC eligibility consideration, small businesses or employers with fewer workers can receive credit based on all wages paid, whether the employees worked or not. Large employers can only consider wages paid to their people while they were not working.

In short, for small employers, all wages may be eligible for the ERC credit. In contrast, for large businesses, only wages paid while those employees are not providing a service are considered for the ERC credit.

The Affordable Care Act Curveball
Much of the confusion with this issue comes from the fact that figuring the number of employees is also required for the Affordable Care Act (ACA) but figured using a different method.

It is the difference between “full-time employees” and “full-time equivalent” employees allowed under the rules of the ACA. The ACA calculation method does NOT apply to the ERC. Instead, employers should use the formula outlined above to determine their eligibility based on employer size.

In short, it can get sticky without experience navigating these rules.

What’s Next?
To help determine your company’s eligibility, engage a team deeply familiar with the IRS process. We regularly hear from clients that their in-house tax experts or contract CPA firms recommend working with ERC Specialists rather than attempting to handle their applications in-house because the details are so complex.

We’ve been focused on this specific program since it was passed as a part of the CARES Act. As a result, we have navigated various business situations and have as much experience – and success – as anyone else in the industry. Choose the experts at ERC Specialists to ensure your employee count is calculated correctly for an accurate ERC claim.

The post Does Size Matter? For ERC Credit, It Can Mean a Big Difference appeared first on ERC Specialists .

Defining More than Nominal Effects for ERC Filings

Wed, 22 Feb 2023 13:14:00 GMT

The devil is in the details, they say. Even more so as those details and their definitions change over time.

As time passes and details and interpretation shift, the guidelines governing the Employment Retention Credit program (ERC) that has helped so many businesses survive and thrive through the COVID-19 crisis have become clearer. The latest update to the ERC, IRS 21-20, clarifies the many qualifying factors for ERC claims. One definition in particular, “more than nominal” interruption, has caused stress and anxiety to business owners.

The ERC program was created as a part of the federal government’s CARES act, a response to the business and financial stresses caused by the COVID-19 response. As companies were forced to close and partially close for safety reasons, the ERC program has enabled businesses that remained open and employing people to reclaim credit of up to $26,000 per W-2 employee.

That said, as the IRS changed eligibility requirements, concern started to increase about the possibility of being audited for proper eligibility.

What does “More than Nominal” mean?
The short answer is ten percent. If government closure policies impacted ten percent of your business operations, you might meet the eligibility requirements for the ERC program.

The program was criticized early on for lack of specific definitions around several aspects of eligibility. Fortunately, IRS Notice 2021-20, published in March 2021, documented a more precise definition.

Despite this effort at more clarity, however, some confusion remains.

In short, there are two tests the IRS has established to understand what “more than nominal” means to specific businesses – gross receipts and employee hours. If your gross receipts for a portion of your business were reduced by ten percent or more in 2020 or 2021 compared to the same quarter in 2019, this could be used to show a more than nominal effect. Alternately, suppose the employee hours spent on activity within the business that was discontinued due to COVID-related government orders accounted for ten percent or more of the total hours worked by all of your employees. In that case, that is another way of defining “more than nominal” for you.

The concern among businesses, of course, is as these definitions become clearer and interpretations shift, the impact on a possible ERC filing could be significant.

What does it mean to me?
The number one concern among businesses regarding the “more than nominal” and other definitions impacting ERC eligibility is simply you want to prepare documentation that shows a more than ten percent impact of COVID regulations on your business.

If the IRS requests more information, you want to be prepared to document the impacts of COVID on your business and prove your eligibility without any issues. It is imperative to understand all implications of governmental policies impacting your ability to remain open and do business so you and your team can respond effectively if needed.

Using an experienced team with a deep understanding of the ERC program and process is one way to be sure you’re not only eligible for the credit but prepared for any eventuality after you receive it.

What’s next?
At ERC Specialists, we’ve been focused on this specific program since it was passed as a part of the CARES Act. We are one of the teams working in this space that has tracked, evolved, and responded to every change as they were made. As a result, we’ve been able to not only help thousands of businesses with hundreds of thousands of employees apply and qualify for the credit, but we’ve also been able to support them with the education and documentation they may require in the event of IRS examination or audit.

We regularly hear from clients that their in-house tax experts or contract CPA firms recommend working with ERC Specialists rather than attempting to handle their applications in-house because the details are just that specific. Our best advice is simple. First, be sure you understand the program requirements and how to adjust as they change. And second, be sure to utilize expert guidance to handle your application.

The post Defining More than Nominal Effects for ERC Filings appeared first on ERC Specialists .

Time is Running Out: The 2023 Deadlines for Claiming the Employee Retention Credit

Mon, 20 Feb 2023 16:08:00 GMT

Time is Running Out: The 2023 Deadlines for Claiming the Employee Retention Credit

As a small business owner, the Employee Retention Credit (ERC) can provide much-needed relief to businesses that were impacted by the COVID-19 pandemic. But, with key deadlines approaching fast, it’s essential to stay on top of the requirements and understand how to claim the credit correctly.

In this blog post, we’ll guide you through the process of claiming the ERC in 2023, including understanding the deadlines, eligibility criteria, and how to calculate and file for the credit. We’ll also highlight common mistakes to avoid and provide tips on how to track and record the credit. This post will give you the most up-to-date information on the ERC and how to claim it correctly before the 2023 deadline.

Introduction to the Employee Retention Credit

The Employee Retention Credit was introduced as a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act which is a $2.2 trillion economic stimulus bill passed in March 2020. The CARES Act’s main goal was to extend economic relief to American workers and business owners.

It is important to note that the ERC is a refundable payroll tax credit; it is not a loan that needs to be paid back. It is aimed to help employers whose businesses were impacted by the COVID-19 pandemic. And, even more specifically, it was created to help small eligible employers with the cost of keeping staff employed during the hardships of the pandemic.

In 2020, the Employee Retention Tax Credit was extended as part of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 for the first two calendar quarters of 2021. Then the tax credit was extended again in 2021.

Understanding the Filing Deadlines for ERC in 2023

Even though the tax credit expired in September 2021, qualified businesses, companies, and employers can still file paperwork and retroactively receive claims for the Employee Retention Credit in 2023. To do so, business owners must file IRS Form 941-X which is used to make corrections to their originally filed Form 941s, but this can only be done up to three years after they originally filed their payroll tax returns.

According to the IRS , “For purposes of the period of limitations, Forms 941 for a calendar year are considered filed on April 15 of the succeeding year if filed before that date.” Therefore, 941-Xs for eligible quarters in 2020 must be submitted by April 15, 2024. Similarly, the deadline to claim ERC funds for eligible quarters in 2021 must be submitted by April 15, 2025.

Upcoming Deadlines to File for the ERC

Eligibility Requirements for the Employee Retention Credit

There are two main eligibility requirements that employers must meet to receive the tax credit. The first is a significant decline in gross receipts or total revenue without subtracting any costs or expenses. In most cases, the eligibility determination is based on the data from 2019 because it precedes the effects of the COVID-19 pandemic and lockdown, which officially began in March 2020.

Employers Whose Business Experienced a Significant Decline in Revenue

Businesses that experienced either of the following may be eligible to receive the Employee Retention Credit:

Employers Whose Business Was Fully or Partially Suspended Due to Governmental Orders

Businesses that employ a small eligible number of workers could be eligible for the ERC whether the company, business, or shop was forced to close under a government-mandated shutdown order or was able to stay open under a partial shutdown order.

Companies must meet one of the following conditions to be considered eligible in 2021:

How to Calculate the Employee Retention Credit

The employee retention credit calculator is straightforward for experienced firms, but it can be time-consuming because it requires a detailed understanding of the Employee Retention Credit calculation guidelines.

Determining Gross Receipts

In order to qualify for a tax credit based on a decline in gross receipts, the gross receipts for a given quarter in 2020 or 2021 must be compared to the same quarter in 2019 to determine how significant the decline is.

If an employer’s gross receipts were below 50 percent for any calendar quarter in 2020 compared to the same quarter in 2019, they could be eligible for the ERC. For 2021, the threshold is a little easier to meet. A business is eligible for the ERC if its gross receipts are less than 80 percent compared to the same quarter in 2019.

Important Note

This is a payroll tax credit, which means that businesses can receive refunds for taxes already paid. All told, this payroll tax cut could provide much-needed relief to small businesses and help them keep workers on the payroll.

How to File for the ERC in 2023

Eligible employers must first determine their eligibility, making sure they meet the IRS’s qualifications. Otherwise, their paperwork will not be accepted. Once you are certain that you are eligible for the employee retention credit, then you can move forward and actually file for the credit.

Originally, employers were able to claim the employee retention credit whenever they file quarterly taxes to the government through Form 941. However, the deadline for the Employee Retention Credit ended on September 30, 2021. Thankfully, employers can still file for the ERC in 2023!

Employers can amend previously submitted forms by filing and submitting Form 941-X so they can retroactively claim the Employee Retention Credit. Which, as previously stated, can be done for up to three years after the original tax forms were filed.

How to Track Your ERC in 2023

You have the capability to call the IRS to check on your filing yourself, however, the hotline to talk to an IRS agent is flooded and the wait time is typically long. Not only can this be a headache, but it can also be a major time commitment.

So, what is a viable solution? As a part of the white-glove service Stenson Tamaddon offers to our clients, we can call the IRS on your behalf to keep track of your filing. This saves you time and gives you the dedicated customer service you deserve. Learn more about what services we offer by filling out this simple, 7-question form today .

Conclusion and Next Steps

In conclusion, the Employee Retention Credit can provide significant relief for small businesses during the ongoing COVID-19 pandemic. By understanding the 2023 deadlines, eligibility criteria, and how to calculate and file for the credit, small business owners can ensure they are able to claim the credit and receive the financial assistance they need. However, the process of claiming the credit can be complex and confusing.

If you need additional help understanding the Employee Retention Credit or how to claim it in 2023, please don’t hesitate to reach out to one of Stenson Tamaddon’s experienced tax specialists. They are available to answer your questions and provide guidance to ensure you claim the credit correctly before the deadline. Contact us today to schedule a consultation with one of our experts.

The post Time is Running Out: The 2023 Deadlines for Claiming the Employee Retention Credit first appeared on Stentam .

The post Time is Running Out: The 2023 Deadlines for Claiming the Employee Retention Credit appeared first on Stentam .

Do I Need to Pay Taxes on My ERC Funds?

Fri, 17 Feb 2023 21:48:00 GMT

When you receive your ERC funds, you will need to let your CPA or tax preparer know about this. These funds are not taxed as gross income, but it does reduce your payroll expenses. Then let your tax preparer process the associated income tax returns. Each client’s taxes have a very different situation (ie: cash basis, accrual basis, loss/profits). For this reason, we cannot give advice on your individual business’s income tax situation. It will be important for you to have this discussion with your tax professional, once the final amounts are received.

Here is information regarding the ERC and income taxes directly from the IRS website :
Do I have to pay income tax on ERC funds?
Does an Eligible Employer receiving an Employee Retention Credit for qualified wages need to
include any portion of the credit in income?
No. An employer receiving a tax credit for qualified wages, including allocable qualified health
plan expenses, does not include the credit in gross income for federal income tax purposes.
Neither the portion of the credit that reduces the employer’s applicable employment taxes, not
the refundable portion of the credit, is included in the employer’s gross income.

Does the Employee Retention Credit reduce the expenses that an Eligible Employer could
otherwise deduct on its federal income tax return?
Yes. Section 2301(e) of the CARES Act provides that rules similar to section 280C(a) of the
Internal Revenue Code (the “Code”) shall apply for purposes of applying the Employee
Retention Credit. Section 280C(a) of the Code generally disallows a deduction for the portion of
wages paid equal to the sum of certain credits determined for the taxable year. Accordingly, a
similar deduction disallowance would apply under the Employee Retention Credit, such that an
employer’s aggregate deductions would be reduced by the amount of the credit as result of this
disallowance rule.

5 Reasons Dentists Should Claim the Employee Retention Credit (ERC)

Thu, 16 Feb 2023 00:33:00 GMT

Discover the Benefits of the ERC for Dentists

When the COVID-19 crisis shut down businesses across the U.S., significantly impacting the economy across industries, dental practices were hit especially hard. Mandatory office closures, distance requirements and the face-to-face transmissibility of the coronavirus—as well as the general public’s wariness—meant dental practices were partially or fully closed and suffered financially.

The American Dental Association’s (ADA) Health Policy Institute (HPI) surveyed more than 19,000 dentists to track how they handled the pandemic. They found that 76% of those surveyed had closed their offices to all but the most critical emergency patients and 19% had fully closed. And US News & World Report , when they analyzed patient volumes, found that they were down by up to 79% at the beginning of the closures and 27% by the time state bans were lifted.

To help small businesses and practices like yours keep the lights on and continue to pay employees during this challenging time, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act — one of the largest stimulus packages ever. The CARES Act includes financial relief benefits for business owners that remained committed to their staff and community during the pandemic. One such benefit is the Employee Retention Credit (ERC), a payroll tax credit from the government that can be worth thousands or even millions in tax refunds.

You can still claim the ERC in 2023 , and your business does not have to be struggling today to qualify. In this blog, we will explain the many benefits of the ERC for dentists and dental practices.

Is the Employee Retention Credit for Dentists?

Yes! Most dentists are eligible for the ERC credit if they paid employees in 2020 or 2021. Unfortunately, many organizations that qualify for this potentially valuable payroll tax credit didn’t initially claim it on their 2020 and 2021 payroll tax filings. They may not have believed they qualified or felt they were ineligible because they received a Paycheck Protection Program (PPP) loan. The good news is that the funds are still available. Here are five reasons your dental practice should apply now for the Employee Retention Credit .

1. Most Dental Practices May Qualify

There are two ways to qualify for the ERC for dental practices: a significant decline in revenue or if government orders impacted your business. Your dental practice does not have to meet both of the following qualifications — only one or the other.

Revenue Decline

The easiest way to identify if your practice may be eligible is to determine if you experienced lost income in 2020 or 2021. When compared to 2019 revenue, dental practices that experienced a 50% drop in any quarter of 2020 and/or a 20% drop in any of the first three quarters of 2021 may qualify. But if you didn’t lose money, you could still receive the ERC refund based on how your practice was impacted by government mandates.

Government Order Impact

If your dental practice had to close, limit capacity, or modify operations due to local, state or federal government orders, social distancing requirements, or any other pandemic mandates, you likely qualify.

This could include any of the following:

2. Dentists Could Receive Up to $26,000 Per Employee

When first introduced as part of the CARES Act in 2020, the maximum credit allowable under the ERC was $5,000 per employee. With its renewal and expansion under the Consolidated Appropriations Act (CAA) in 2021, the maximum credit increased to $21,000. This new potential refund made the ERC for dentists far more attractive.

The ERC refund could be quite significant for your dental practice. Use our ERC refund calculator to get an estimate of your potential ERC refund amount based on your number of employees. Most practices will find that they qualify for a significant windfall refund.

3. The ERC for Dentists is Retroactive

Dentists can still claim the ERC today in 2023. Though 2021’s Infrastructure Investment and Jobs Act (IIJA) effectively repealed the ERC program for the fourth quarter of 2021, dental practices are still allowed to amend their payroll tax filings (submit IRS Form 941-X) for the covered periods in 2020 and 2021. Eligible practices claiming the ERC will receive a refund check from the government for the amount calculated and claimed. Don’t miss your chance to claim your piece of the $2.4 trillion pie!

4. Dental Practices Could Get a Cash Refund

The ERC for dentists began as a federal credit calculated based on a practice’s quarterly payroll taxes (not the practices’ income taxes), with the refund amount determined by how many W-2 employees the company retained during the eligibility period. Though the ERC has ended, your practice can still benefit from it. Once your claim has been filed and is verified and processed by the government, a refund check will be issued, providing a welcome cash infusion as your practice faces a challenging economic landscape.

5. Claiming ERC Doesn’t Have to Be Like Pulling Teeth

The process for claiming your ERC refund begins with determining whether you qualify. Then, working with your CPA or tax preparer, you need to file amended payroll tax forms for 2020 and/or 2021 and submit them to the government for your refund.

Or you could make it easier on your practice and partner with a company that specializes in claiming the ERC for dentists, like Omega Accounting Solutions . Our specially-trained ERC experts can determine if your company may be eligible with just a 10-minute call. They can also handle the entire filing process for you. If you need financial support right away and can’t afford to wait 6 to 12 months for IRS processing, Omega Funding Solutions can provide a bridge loan based on your expected ERC refund.

The post 5 Reasons Dentists Should Claim the Employee Retention Credit (ERC) appeared first on Omega Accounting Solutions .

ERC Credit Survey: Small Businesses Lack Tax Credit Guidance

Mon, 13 Feb 2023 21:24:00 GMT

The post ERC Credit Survey: Small Businesses Lack Tax Credit Guidance appeared first on Omega Accounting Solutions .

Omega’s Jay Woods Appears on Barstool Token CEO Podcast

Fri, 03 Feb 2023 01:20:00 GMT

Woods offers advice and anecdotes from his business experience

Omega Accounting Solutions’ founder and president, Jay Woods, recently appeared on the popular Barstool Podcast, Token CEO , to discuss the accounting business and Omega’s long-term mission. He touches on several interesting challenges that he’s faced while running a growing business and serving unique clients.

Along the way, Jay explains why working with Omega can be pivotal to small and medium-sized businesses across the nation. Check out Jay’s conversation with Token host Erika Ayers in the video below:

If you’re a small or medium-sized business owner curious about Omega’s services, please do not hesitate to contact us .

The post Omega’s Jay Woods Appears on Barstool Token CEO Podcast appeared first on Omega Accounting Solutions .

The ERC Program in 2023: All You Need to Know

Thu, 02 Feb 2023 01:34:00 GMT

Is your small business still recovering from the economic challenges of the pandemic? Have you looked into the Employee Retention Credit program (ERC)? You’ve probably heard about this payroll refund program, but if you’re still trying to figure out if it’s for you, read on. This article will look at what the ERC program is, how to claim it in 2023, and everything you need to know about ERC funding for your business.

What is the ERC Program?

As we’ve talked about before , the ERC is a payroll refund program that rewards businesses for keeping their employees working during the pandemic and continuing to pay their payroll taxes. Created under the CARES Act, the ERC money program can provide small business owners up to $26,000 per W-2 employee that worked for the business in 2020 and 2021.

The ERC government program is a tax credit originally designed by lawmakers to help financially strapped businesses keep running in the wake of the COVID-19 crisis and to keep employees working. Recognizing that local, state, and federal mandates impacted businesses of all types, employers qualify for the ERC if they saw a decline in gross receipts, had to limit their capacity or were forced to shut down for any period of time.

Is the ERC Program Real?

The ERC government program is a real tax credit providing real payroll tax refunds to qualifying businesses across the USA. The good news is that qualifying employers can and should take advantage of the ERC program in 2023. The bad news is that there are a lot of pop-up tax credit companies and third-party ERC “specialists” with unscrupulous practices like failing to fully qualify a small business before processing an ERC credit, overclaiming the credit or charging exorbitant fees to process the claims.

Worse yet, many of these companies have only started up in the last couple of years and will likely disappear by the time the ERC officially ends in 2025, leaving the businesses that used them without recourse in case of an audit. It is essential for business owners to deeply vet an ERC provider before choosing to do business with them.

Who Qualifies for the ERC?

Most companies with up to 500 employees may qualify for this small business tax program.

Startups, corporations, LLCs, nonprofits, and everything in between, may be eligible for the ERC government program. US-based businesses in nearly every industry may find that they meet the criteria to receive ERC funding.

There are three basic qualifications for the ERC program that a company must meet:

Businesses that meet these criteria may be eligible for the credit, though a trusted ERC partner can ensure a small business truly qualifies and build an ERC claim that can withstand an IRS audit.

Do I Need the ERC?

Even if your business does not need ERC funding, it would be unfortunate to miss out on a payroll refund program your company qualifies for. If you continued to serve your community by employing staff and paying payroll tax, the ERC was designed for your business. If you meet the eligibility criteria, you have already earned this payroll refund. You only need to claim it before the ERC program deadline.

Can I Still Apply for ERC in 2023?

We are happy to report that you can still apply for ERC funding in 2023. The ERC program deadline has recently been clarified, with experts explaining that there are only two hard deadlines for the Employee Retention Credit: for all quarters of 2020, the deadline to apply for the ERC is April 15, 2024; for all quarters of 2021, the deadline is April 15, 2025.

How Do I Claim My ERC Refund?

While some internal accountants or CPAs have handled ERC claims for their businesses, we recommend working with an outside expert. The process can be difficult to navigate and complicated to process. It would be too easy to miscalculate or overestimate the credit amount, opening your company up to tax penalties or a potential audit. Likewise, if you underestimate the total, you miss out on receiving the full refund your company is entitled to get from the government.

It is best to have an experienced, specially trained team advising your business. Applying for the ERC tax credit program can feel like an enormous task, but fully trained tax incentive advisors will help your company determine your eligibility and guide you through the claims process.

Contact an ERC Program Expert

Omega Accounting Solutions’ ERC experts can handle the entire program for your business, guiding you every step of the way. With a history of serving companies across a wide range of industries, Omega has helped thousands of small businesses prepare claims that can stand up to the rigors of an audit.

Unlike other ERC processors, Omega Accounting carefully builds a complete picture of your company’s financial situation to ensure that you comply with all ERC requirements. Once you provide Omega’s tax credit specialists with the needed documents, they will determine your credit, process it, and provide backup materials to show the government that your claim has been thoroughly verified.

Omega’s ERC funding program even offers bridge loans for companies that need to manage financial obligations during the 6-12 months it can take to receive ERC funding from the government. Contact us today to get started on the Employee Retention Credit program!

The post The ERC Program in 2023: All You Need to Know appeared first on Omega Accounting Solutions .

Omega Partners with Barstool Sports to Raise ERC Credit Awareness

Thu, 02 Feb 2023 01:28:00 GMT

Omega x Barstool Partnership to Educate Business Owners About ERC Tax Credit

IRVINE, Calif. – Omega Accounting Solutions, an accounting and data firm that empowers small businesses to make informed decisions through powerful accounting, has been a leader in helping small businesses obtain their Employee Retention Credit (ERC). With limited time available to file for the ERC tax credit (up to $26k per employee), Omega has revamped its public awareness efforts to reach as many small business owners as possible impacted by Covid-19. They turned to Barstool Sports , one of the most influential lifestyle and sports media companies in America. By partnering with Barstool, Omega hopes to reach a new audience of small business owners and spread ERC credit awareness around the benefits of the payroll tax program .

“When the pandemic hit, Barstool Sports took a stand for small businesses, making a monumental impact,” said Jay Woods, Founder and President of Omega Accounting Solutions . “As a small business champion, we are on a mission to help owners across America qualify for this generous tax credit, and aligning with Barstool Sports gives us a big megaphone to do exactly that.”

How Will Barstool Promote Omega’s Message?

Omega will be running exclusive live ad reads through marquee integrations across dozens of Barstools’ programming, including One Bite Pizza and Sundae Conversations, and tent-pole events including Arizona Bowl and activations leading up to professional football’s biggest game including The Dozen Live, Saguaro Scramble , and Mini Golf Open and more.

“Barstool Sports knows that small businesses are the backbone of our communities and that the pandemic continues to create ripples that put many of those businesses at risk,” said Erika Ayers, CEO of Barstool Sports. “Our partnership will amplify Omega Accounting Solutions’ efforts to educate and help small businesses access the Employee Retention Credit.”

What Is the Employee Retention Credit All About?

The ERC is a powerful tax credit passed during the pandemic by the federal government to aid small- and mid-sized businesses. It provides qualified companies with a tax refund on previous overpayment of taxes during the crisis, allowing them to reinvest in their business, pay employees and keep their doors open.

“The ERC tax credit is three times the size of the $800 billion PPP fund or approximately $2.4 trillion,” said Woods. “And while billions of dollars in unclaimed aid is still available, many business owners are misinformed and do not know how to qualify. At Omega, we believe it is our duty to help them.”

Why Raise ERC Credit Awareness Now?

After the worst of the pandemic, America’s small businesses still face labor shortages, skyrocketing costs, and threats of a potential recession. A new survey commissioned by Omega reveals that small business owners and decision-makers remain gravely misinformed and lack facts about their ability to qualify or resources to handle the filing.

Survey results found that 81% of small businesses felt that they were at a disadvantage without adequate accounting or financial direction, while 31% of respondents said the tax or financial experts that they typically rely on for their tax needs haven’t been able to provide enough accurate ERC credit guidance. Omega analysts believe these findings indicate that small businesses are often underserved when it comes to tax credits. Omega’s new partnership with Barstool Sports should help change that.

The post Omega Partners with Barstool Sports to Raise ERC Credit Awareness appeared first on Omega Accounting Solutions .

How to Amend Form 941 for Employee Retention Credit (ERC)

Thu, 19 Jan 2023 19:58:00 GMT

As a small business owner, you may be eligible for the Employee Retention Credit (ERC) to help offset the impact to your business from the COVID-19 pandemic. However, navigating the process of claiming this credit can be confusing, especially when it comes to amending Form 941.

In this blog post, we will guide you through the process of amending Form 941 to claim the ERC and provide you with the information you need to ensure that your claim is accurate and approved. Whether you’re a first-time claimant or have already claimed the credit, this post will provide you with the most up-to-date information on the ERC and how to claim it correctly through Form 941.

Understanding the Employee Retention Credit

The Employee Retention Credit was created in March 2020 under the CARES Act. This initiative was an incentive for employers to retain employees on payroll during the Coronavirus Pandemic. The tax credit is available to employers whose business was more than nominally impacted by governmental shutdowns or whose profits suffered a significant decline due to the COVID-19 pandemic.

To apply for the credit, eligible employees must submit their qualified wages paid, including any applicable health care costs, when they submit their 941-X form to the Internal Revenue Service tax office. Eligible employers must file Form 941-X for each calendar quarter in which they wish to claim the employee retention credit.

What Are Qualified Wages?

Qualified wages are wages paid to an employee after March 12, 2020, and before January 1, 2021. The amount of the credit is 50% of qualified wages paid by the employer to employees during the covered period, limited to the first $10,000 in wages paid during the year for 2020 and per quarter for 2021.

The definition of qualified wages for 2020 changes slightly depending on how many employees depend on how many employees a business employed in 2019. For an eligible employer that averaged more than 100 full-time employees in 2019, qualified wages are the wages paid to an employee for time that the employee is not providing services due to either a significant decline in gross receipts or a full or partial shutdown because of a government-mandated shutdown. For eligible employers with less than 100 full-time employees, qualified wages are the wages paid to any employee under the same circumstances. However, it is imperative that these expenses were paid after March 12, 2020, and before January 1, 2022, as this is the period covered by the laws related to the Employee Retention Tax Credit.

It is also important to note that wages used to obtain Paycheck Protection Program (PPP) loan forgiveness can not also be used as qualified wages for the Employee Retention Credit.

Who’s Eligible for the Employee Retention Credit?

Businesses that experienced the following may be eligible to receive the Employee Retention Credit:

Note: that they may be eligible for one calendar quarter but not the other calendar quarter, in the same calendar year.

Businesses that employ 500 or less full-time workers could be eligible for the ERC whether the company, business, or shop was forced to close under a government-mandated shutdown order or was able to stay open under a partial shutdown order.

Eligible companies can either be for-profit organizations or tax-exempt organizations such as a non-profit. Apart from this, they must meet one of the following conditions in 2020:

Companies must meet one of the following conditions to be considered eligible in 2021:

With that, companies that recovered from a significant decline in gross receipts and did not take the tax credit previously are still eligible to do this in 2023 even though the program has ended. Companies around the United States have three years after they filed their payroll taxes to review the wages paid and salaries earned after March 12, 2020.

What is Form 941-X?

Form 941-X is an IRS form used to make corrections to Form 941. This form must be completed and submitted by employers who wish to make corrections to their Form 941 submission.

To complete Form 941-X, employers will need to provide information on their federal income tax withholding, employment taxes, and taxable Medicare wages.

Once the form is completed, it must be submitted to the IRS along with a detailed explanation of the errors being corrected.

Corrections made on Form 941-X can be made for any quarter in the current year or any of the three previous years. This form cannot be filed electronically and may take a while to process. Employers with questions about Form 941-X can contact the IRS directly or speak with one of our tax specialists.

Why Should You Amend Form 941

Form 941-X can be used to amend tax returns and make any necessary corrections. For example, if you decide to file for the Employee Retention Credit for eligible quarters in 2020 and 2021, you can complete Form 941-X to correct those returns and get your money back.

Submit a Separate Form 941-x for Each Form 941 That Needs to Be Corrected

You must submit Form 941-X within three years of the filing deadline for your original Form 941. You can submit Form 941-X to edit any of the following:

We Can Help!

If you are unsure about how to file a 941-X amendment for the ERC, or if you need assistance preparing and submitting your application, we recommend working with one of our experienced tax professionals. Here at Stenson Tamaddon, our tax specialists can guide you through the process. We can also answer any questions you may have along the way, so you can feel confident about the accuracy and completeness of your amendment. With our help, you can feel confident about your 941-X amendment and the accuracy of your company’s reporting. Don’t miss out on potential savings – schedule a meeting with a tax specialist now.

The post How to Amend Form 941 for Employee Retention Credit (ERC) first appeared on Stentam .

The post How to Amend Form 941 for Employee Retention Credit (ERC) appeared first on Stentam .

How to Calculate the Employee Retention Credit (ERC)

Thu, 19 Jan 2023 00:18:00 GMT

The pandemic has affected virtually every segment of the economy, with some areas bearing more of the brunt than others. Small businesses have been particularly hard hit, incurring significant financial losses as a result of the COVID-19 pandemic and the ensuing government shutdowns. The economy closed to varying degrees, and many businesses crumbled. Many companies were forced to reduce employees’ hours in order to keep up with rising expenses and, in many cases, were forced to lay off workers.

To combat this problem, the government enacted the Employee Retention Credit (ERC) to help support businesses that were able to retain their employees during this challenging time. The goal of the ERC is to provide financial assistance to companies that choose to continue paying their workers, even when a business has slowed down significantly. In this article, we will explain how to calculate employee retention credit and how it can help small businesses recover from this economic hardship.

What is Employee Retention Credit (ERC)?

The employee retention credit is a tax credit that was established to support businesses experiencing hardship in the wake of COVID-19. Qualified employers can receive up to half of the qualified wages paid to their employees for the tax year 2020. For 2021, that percentage increased to 70% of the eligible earnings paid to their employees, up from 50% in 2020. With the amount of money that’s being credited to eligible businesses, the employee retention credit is a critical tool for supporting businesses during economic uncertainty.

Who Qualifies for the Employee Retention Credit?

Before you start calculating your ERC, it’s important to understand who qualifies for this credit. As a refundable tax credit, the ERC applies to qualified wages, which eligible employers pay to their employees. To receive the tax credit, a business must meet at least one of the following criteria:

What Are qualified wages?

Qualified wages are wages paid to an employee after March 12, 2020, and before January 1, 2021. The amount of the credit is 50% of qualified wages paid by the employer to employees during the covered period, limited to the first $10,000 in wages paid during the year for 2020 and per quarter for 2021.

For eligible employers with less than 100 full-time employees, qualified wages are the wages paid to any employee under the same circumstances. However, it is imperative that these expenses were paid after March 12, 2020, and before January 1, 2022, as this is the period covered by the laws related to the Employee Retention Tax Credit.

It is also important to note that wages used to obtain Paycheck Protection Program (PPP) loan forgiveness can not also be used as qualified wages for the Employee Retention Credit.

How to Calculate Employee Retention Credit?

The employee retention credit calculator is straightforward for experienced specialists, but it can be time-consuming because it requires a detailed understanding of the Employee Retention Credit calculation guidelines .

Determining Gross Receipts

Important Note

Things To Do When Calculating the Employee Retention Credit

According to the IRS, there are a few key steps businesses should take when calculating their employee retention credit. These steps include:

Know Your Business Operations From 2020-2021

Determine whether or not your company was subject to any periods of partial or complete suspension due to governmental orders during the years 2020 or 2021.

Review Your Gross Receipts and Payroll Tax Deposits

Review and evaluate your quarterly payroll tax deposits and receipts to determine whether you are eligible for the credit. You can do this by consulting with a tax specialist.

Determine Your Qualified Employees.

Next, you’ll need to determine how many full-time employees were working for your company on average each month in the years 2019, 2020, and 2021. For the purposes of the ERC, a full-time employee is someone who works 30 hours or more per week or 130 hours or more per month.

Do the Math

To qualify for the refund based on loss of revenue, you will need to demonstrate through your receipts that your revenue dropped by at least 50% as compared to the same quarter in 2019.

Determine the amount of the employee salaries you continued to pay during any of the suspension periods stated above. You should also factor in health coverage expenses provided to all full-time workers during the relevant periods in 2020 and 2021.

Benefits of Calculating Your Employee Retention Credit

There are several benefits to calculating your ERC, including:

Increased Funds

One of the greatest benefits of calculating your employee retention credit is that you can receive a payout in the form of a check straight to your business. The funds received can be used for any business-related expenses such as:

Eligibility to Claim

You are still eligible to make a claim for the ERC in 2021, according to the Consolidated Appropriations Act (CAA), regardless of whether you have received a PPP loan in the past. Although the minimum qualifying wages to be reported are slightly different for each program, some employers can benefit from both.

Non-Refundable Aid

Since the money from the ERC return does not come in the form of a debt in any manner, shape, or form, there is no requirement that it be repaid or forgiven.

How To Claim the Employee Retention Credit

Originally, employers were able to claim the employee retention credit whenever they filed quarterly taxes to the government through Form 941 . However, the deadline for the Employee Retention Credit ended on September 30, 2021. Thankfully, it’s not too late for businesses to take advantage of this credit!

Employers can amend previously submitted forms by filing and submitting Form 941-x so they can retroactively claim the Employee Retention Credit. They can do so for up to three years after the original taxes were submitted.

Need Help Claiming Your Employee Retention Credit?

After learning about the Employee Retention Credit and all the benefits it offers, many small business owners may be wondering how they can go about claiming it. If you need help calculating your ERC or filing the necessary forms to claim your advance payment, we can help !

The post How to Calculate the Employee Retention Credit (ERC) first appeared on Stentam .

The post How to Calculate the Employee Retention Credit (ERC) appeared first on Stentam .

How to Apply for the Employee Retention Credit (ERC)

Wed, 18 Jan 2023 00:27:00 GMT

The Self-Filer’s Guide to Claim ERC Today

The Employee Retention Credit (ERC) is providing incredible financial benefits to small and medium-sized businesses across the country. Companies in nearly every industry are receiving payroll tax refunds worth thousands or even millions of dollars, and as a savvy business owner, you don’t want to miss out.

But applying for ERC credits can be a daunting task. IRS regulations are incredibly complicated, and tax penalties await businesses that miscalculate their credits or misinterpret ERC rules. All too often, Uncle Sam’s red tape prevents business owners from claiming government benefits they’re eligible for.

Business owners should not have to lose tax credits they’ve already earned.

In this ERC guide, we will demonstrate how to apply for the Employee Retention Credit. However, we advise you to seek assistance from a tax credit servicer that specializes in the ERC.

How do you apply for the Employee Retention Credit?

Qualifying businesses can apply for the Employee Retention Credit by amending their payroll taxes using IRS Form 941x . You can follow the 941 x instructions below and mail your payroll tax amendments with supporting documentation to your IRS processing center. However, you should consult a reputable tax credit specialist before applying for ERC credits. Experienced ERC providers know precisely how to follow the IRS’s rigorous 941x instructions and maximize your tax refund while staying in compliance with ERC rules.

Applying for the Employee Retention Credit is complicated. Determining your business’ ERC eligibility can be difficult, and calculating your credit amount is even more challenging. If you overclaim your ERC refund, your company will likely have to pay back the extra credit with penalties and interest. If you underclaim it, you miss out on money your business was owed.

We recommend seeking an experienced tax credit provider to handle the ERC claim process for you. If you would like to get started on your ERC application on your own, or simply explore applying for ERC, follow the steps below. However, do not submit a 941x without having an expert review your work.

How to Apply for the Employee Retention Credit

Step 1: Predetermine how and when you qualify for the ERC

The first step in applying for ERC credits is determining which quarters you qualify for, and the reasons you qualify. The ERC treats 2020 as a whole entity, while 2021 is looked at quarter by quarter. This means you must examine each quarter of 2021 individually, and submit a 941-X payroll tax amendment for each quarter in which you qualify. The 2020 ERC, however, is qualified only once for the complete year.

The ERC credit amounts in Q1 or Q2 2020 will impact later quarters, while the credit amounts in Q1 2021 do not impact the credit amount in Q2 2021.

Qualifying for the ERC 2020

To qualify for an ERC tax credit for 2020, your business must meet three qualifications:

EITHER

*If your company expanded above the 100-employee threshold in 2020 or beyond, you may still qualify based on your employee count from 2019. Part-time employees working less than an average of 130 hours per month do not count towards the 100-employee cap.

**Your company does not have to meet the declined income requirement for both years to qualify. 2020 is treated as a yearly qualification, meaning your annual income must have declined by the specified amount. 2021 is treated on a quarterly basis, meaning you can qualify by annualized income from a single quarter (divide the given quarter’s income by 3, then multiply by 12).

***Some common reasons to qualify through government mandate impact include social distancing mandates, limited capacity orders, reduced operating hours, etc. The government order must have impacted your business operations by more than 10%.

Qualifying for the 2021 ERC

To qualify for an ERC tax credit for 2021, your business must meet three qualifications:

EITHER

*If your company expanded above the 500-employee threshold in 2020, 2021, or beyond, you may still qualify based on your employee count from 2019. Part-time employees working less than an average of 130 hours per month do not count towards the 500-employee cap.

Step 2: Gather documents for each quarter in which you qualify

You need the following documents to calculate your ERC claim:

Step 3: How to calculate your ERC claim for each qualifying quarter

Examine your payroll summary report for each quarter in which you qualify. Look at each W-2 employee individually, tallying up each worker’s wages. Do not include wages paid to the majority business owners and their family members — these wages do not qualify for the ERC. Determine which (and when) employee wages were paid with PPP, and subtract that amount from each employee’s total.

For each employee who was paid less than $10,000 in wages in a particular quarter, you can add on any employer-paid healthcare costs, which the IRS counts as payroll costs. At this point, you should have a set of wage costs representing each W-2 employee in your company.

Then, multiply each employee’s total by 0.5 for quarters in 2020 and/or 0.7 for quarters in 2021.

Finally, add those adjusted employee totals together. This is your ERC claim total and, if calculated correctly, reflects your final ERC refund amount for the particular quarter.

Step 4: 941 X Instructions: Fill the form for each qualifying quarter

First, fill out your unique business information at the top of IRS Form 941-X . Be sure to indicate which quarter and year you are amending in the top right-hand corner of page one. Also, follow the official IRS 941 X instructions .

Part 1: Check option 2 to claim a refund or abatement.

Part 2:

Part 3:

Part 4: In field 43, provide a detailed description of how you determined your corrections

Part 5: Sign and print your name. If you are a paid preparer, fill out the section titled “Paid Preparer Use Only.”

*Be sure to follow the additional instructions regarding the timing of your 941-X filing on page 6.

As you can see from the instructions, learning how to apply for the Employee Retention Credit is incredibly difficult. Should you have any questions or require assistance from a professional ERC provider, do not hesitate to contact Omega Accounting Solutions .

Where do you mail a 941-X form?

Tax preparers can mail their completed 941x to the nearest Department of the Treasury/ IRS Submission Processing Center located in either Ogden, Utah or Cincinnati, Ohio. For the complete 941x mailing address and to determine your designated processing center, please use the official IRS Form 941x mailing instructions .

How long does it take to receive my ERC refund?

Due to backlogs at IRS submission processing centers, it currently takes about six to nine months to receive your ERC refund. Some businesses have reported waiting up to a year for their ERC refund check to arrive by mail.

However, businesses that need funding now may be eligible for an ERC advance loan from Omega Funding Solutions . ERC bridge loans are secured against your anticipated tax refund, bringing immediate cash flow to cover business expenses now.

Do I Need an ERC Provider to Claim the Employee Retention Credit?

Some internal accountants have claimed the Employee Retention Credit without outside assistance, however, we recommend seeking guidance from a professional ERC provider. As you can see from the application process described above, filing for the ERC with a payroll tax amendment can be quite complicated.

Claiming the ERC without expert help is a risky proposition for your business — even payroll tax professionals and CPAs find this special tax credit difficult to navigate. There is a likelihood that your company’s finance department will miscalculate your credit amount. If they overclaim your refund, your company will be subject to tax penalties and legal scrutiny. If they underclaim your refund, you leave money on the table that you were legally entitled to.

Learning how to apply for the Employee Retention Credit is a monumental task. We recommend consulting an experienced tax incentives advisor to help determine if your company qualifies and guide you through the ERC claims process.

Contact an ERC Specialist

The tax credit professionals at Omega Accounting Solutions can handle the entire ERC application process for you. If you qualify, Omega’s ERC experts know precisely how to build ERC claims that will stand up to an audit. They’ve already secured ERC refunds for clients in nearly every industry.

With Omega, all you have to do is provide the relevant documents. Their tax credit specialists will determine your ERC eligibility and credit amounts, process your credits, and provide documents to substantiate your ERC claims. You can simply collect your ERC refund check and get back to doing what you do best.

Omega Accounting is not just another ERC specialist. They perform due diligence on your company’s financial picture to ensure compliance with ERC rules. Should your company ever be audited, you can rest assured that your ERC claim was prepared by experienced professionals and is honest and accurate. Contact Omega to claim the Employee Retention Credit the easy way.

The post How to Apply for the Employee Retention Credit (ERC) appeared first on Omega Accounting Solutions .

How can I tell if my ERC vendor is the right one for me?

Thu, 12 Jan 2023 23:34:00 GMT

Legit or Not. How can you tell?

You’ve probably been getting those calls. From numbers you don’t recognize. The voicemail from someone telling you how much you can get from the government in pandemic relief just because you own a business. “Don’t miss out on up to $26,000 per person!” they say.

You don’t recognize the voice. You don’t know the name. All you hear is a promise of getting something for nothing. Sort of.

It sounds like a great opportunity. Twenty-six thousand per employee can add up to a big chunk of change after all. But is it legit?

How can you tell which vendors are shady and which vendors are legitimate?

Our advice… start asking questions. And look for good answers.

Experience

When working with tax specialists who are making filings on your behalf, it’s important to ask about their experience. Yes, it’s true the ERC program is new and has even evolved over that short time. However, the vendor you choose to work with should have a thorough accounting and tax policy background. And they should be able to give you examples of the types of businesses and industries they’ve worked in as well as testimonials from satisfied clients. More on this later.

Eligibility

Perhaps the most important aspect of the ERC process is establishing and verifying your eligibility for the benefit. If it turns out later that you weren’t eligible or your eligibility comes into question otherwise, it can be a serious issue for you. We recognize this as one of the most important aspects of the entire process and spend appropriate time and energy on helping you discover if you fit the program.

Disclosure

Legitimate ERC providers will inform their clients of the need to account for the ERC on their income taxes. They should tell you that when your checks arrive, you’ll want to inform your CPA or tax preparer. According to the IRS memo IR-2022-193, October 19, 2022, “If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction.”

Fair Fees and Agreements

The amounts of money that companies charge for ERC filings vary widely. But there is one thing to watch out for in an ERC vendor, and that is upfront fees charged BEFORE analysis. If a company promises large refunds and wants you to pay them and sign a contract before they have done any analysis or discovery about your company, that is a red flag. Reputable vendors do the work FIRST and then allow business owners to find out the amount of their ERC credits before making any payments and signing any agreements.

Coloring Within the Lines

The ERC is a federal program that requires communication with and filings to the IRS. And for experts in the field who have successfully helped long lists of clients navigate the process, it isn’t an overly arduous effort, but for independent business owners and vendors without that experience, it can be challenging to keep up with all the required IRS notices and revenue reporting procedures. If you ask, the vendor you’re considering should be able to give you a detailed, step-by-step of everything that’s required by the IRS, required of you, and estimated timelines and deadline expectations. Surprise is not a word you want to hear from anyone as you navigate this process. We’ve actually seen many customers whose accounting departments and outside accounting firms have recommended working with an ERC expert for just these reasons.

Have You Received PPP Funds?

ERC eligibility was modified fairly recently to allow businesses that filed under and received PPP funds to also take advantage of this program. But the accounting for these businesses, while not difficult, is specific. PPP wages are excluded from consideration under the ERC program, and any vendor you’re considering should know this and be able to explain it to you in detail.

IRS Interaction

Ask the vendors you’re considering working with, “what happens if?” If the IRS audits your ERC application? What if the IRS asks for more information? What if months or more down the road, the IRS wants to look at the original documentation? Any reputable vendor should be able to commit to:

Keeping all documentation on file for required periods

Being available to communicate or meet with the IRS on your behalf if necessary

Being able to provide answers to any questions even after the application is approved and funds received

Basically, your ERC vendor should back their own work 100 percent.

Reviews

Your vendor should not only be able to provide you with multiple good reviews and testimonials from their satisfied clients but should be happy about getting the question. Any vendor who balks at providing information like this should be possibly shady. We’re all happy to share tales of our successes in whatever industry we work in. Your vendor should be no different.

These are just a few of the questions you should ask before engaging an ERC expert to handle your application and filing. Don’t be shy about asking. Don’t question it if they can’t give you the answers and evidence you’re asking for.

This will position you in the most positive way when beginning the ERC process.

The post How can I tell if my ERC vendor is the right one for me? appeared first on ERC Specialists .

What is Considered a “Partial Suspension?”

Thu, 12 Jan 2023 23:31:00 GMT

When it comes to determining an organization’s eligibility for the Employee Retention Credit (ERC), the IRS has several criteria to consider. One broad qualification is a full or partial suspension of a business’s trade or operations due to government orders in 2020, during the height of the COVID-19 pandemic.

According to Section 2301(c)(2)(A) of the CARES Act, eligible employers would include: “ Any employer carrying on a trade or business during calendar year 2020, and, with respect to any calendar quarter, for which (1) the operation of the trade or business carried on during calendar year 2020 is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19, or (2) such calendar quarter is within the period in which the employer had a significant decline in gross receipts, as described in section 2301(c)(2)(B) of the CARES Act. ”

A full suspension of business operations is fairly easy to understand and evaluate. Business as usual was halted – period. But what about a “partial suspension?” What sorts of operational changes would be considered a partial suspension of business and would qualify an employer for the ERC?

Such changes would include:

An Example of Partial Suspension

Let’s say you have a business that manufactures auto parts, and your local jurisdiction considered you an essential trade or business, so you were able to remain open and operational.

However, one of your suppliers was required to suspend operations by a government order, and this suspension impacted their ability to deliver necessary raw materials to you. If you couldn’t get these raw materials from another supplier, you would be unable to continue your normal operations.

So although your business was able to remain open, you could be eligible for the ERC because your operations were hindered by a government order that impacted your supplier.

How Do I Find Out if I’m Eligible?

It’s very important to determine if you’re eligible for the ERC. It could result in a credit of up to $26,000 per employee on your payroll. But this highly specialized area of tax law requires expertise.

That’s where we come in. We’ve helped clients across the country figure it out.

We break a complex process down into a few simple steps. We’ll start with a free analysis to see if your business is eligible. Then, if you qualify, we can walk you through the payroll information and forms we’ll need to calculate your credit. Then we’ll help you submit the paperwork.

It’s that simple.

How Do We Get Paid?

If our analysis determines that you aren’t eligible to receive the ERC, the review costs you nothing. It does, however, ensure that you don’t leave money on the table.

If we determine that you are eligible, our service charge is calculated along with your free analysis so you can see what you would receive as a credit and the percentage of the credit recovery that we would be paid. We’re only paid when you receive your credit. And our service fee is typically 10-15% of the credit amount.

There’s no risk, and a great potential reward.

Let’s get started today. We’re looking forward to helping you.

The post What is Considered a “Partial Suspension?” appeared first on ERC Specialists .

Can Increased Cleaning Requirements Qualify My Company for ERC?

Thu, 12 Jan 2023 23:29:00 GMT

As the COVID-19 pandemic spread throughout the United States in 2020, government officials enacted several measures aimed at reducing public transmission and minimizing exposure – including storefront closures, social distancing guidelines, and stringent cleaning and sanitization requirements.

Since so many businesses were economically hurt by these government orders, Congress passed the CARES Act in March 2020. One key provision of this act was the Employee Retention Credit (known as ERC) — a tax measure intended to provide economic relief so companies who were impacted could continue to pay their employees.

Requirements like intensive cleaning and sanitization schedules impacted some industries and organizations more than others. For example, a food processing facility that typically operates 24 hours per day would have been adversely affected by a local government order that required each business to deep clean their facility once every 24 hours.

If this employer had to close the facility for five hours each day to deep clean, they could be considered to have partially suspended their operations. Employers are considered to have a partial suspension of operations if they must reduce their operating hours to comply with a government order.

If government orders had a qualifying impact on your business, you might be eligible for the ERC — which means a credit of up to $26,000 per W-2 employee. At ERC Specialists, we’ve helped employers across all 50 states figure it out.

If I Think I’m Eligible for the ERC, what comes next?

The CARES Act and ERC are highly specialized areas of tax law, so it can be tricky to determine eligibility and then figure out what to do next if you qualify. But we are experts in this field.

Most clients are referred to us by their own CPAs and tax professionals because they recognize that this calls for specialization.

We simplify a complex process by working with you through a few steps.

First, you’ll complete our qualification form to see if your business is eligible for the ERC. There is no cost, no risk, and plenty of potential rewards for getting our free analysis.

If you qualify, we’ll help you understand what you need to gather from your payroll information and 941 forms.

Finally, our specialists will help you prepare the paperwork and finalize the details so you can receive your credit.

That’s it!

How Do We Get Paid?

After you complete our qualification form, if our analysis shows that you aren’t eligible, it costs you nothing. But it gives you peace of mind – you didn’t leave money on the table.

If you are eligible, our analysis will include what our service charge would be to file. This way, you can see what you’ll receive as a credit and what percentage of that credit we would be paid. We only get paid when you receive your credit, and it’s typically 10-15% of the credit amount.

We’ve helped more than 35,000 businesses across the country and in many different industries recover the credit for more than 200,000 qualified employees. The numbers speak for themselves. We are leaders in this field.

Many of our clients have received six-figure credits. With up to $26,000 per payroll employee, you could receive thousands of dollars to continue growing your business.

We look forward to helping you learn if you’re eligible.

The post Can Increased Cleaning Requirements Qualify My Company for ERC? appeared first on ERC Specialists .

How to Claim the Employee Retention Credit

Tue, 10 Jan 2023 16:20:00 GMT

When the COVID-19 pandemic hit the world in 2020, many businesses had to stop operating in the same way they had before. The United States government responded to this by introducing the Employee Retention Tax Credit (ERTC) or Employee Retention Credit (ERC) to help small eligible employers around the United States with the cost of keeping staff employed.

The Employee Retention Credit is very valuable as it allows employers to receive up to $26,000 per employee. It was written by the United States Congress in March of 2020 and it has actually been extended twice since that time, and thankfully, businesses still have time to file.

What Is The Employee Retention Tax Credit?

The Employee Retention Credit is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act which is a $2.2 trillion economic stimulus bill. The CARES Act intended to help American workers and business owners financially.

In 2021, the Employee Retention Tax Credit was extended as part of the Consolidated Appropriations Act of 2021 for the first two calendar quarters of that year. Even though the tax credit expired in October 2021, qualified businesses, companies, and employers can still file paperwork and receive claims up to three years after they originally filed their payroll tax returns for eligible quarters.

The Employee Retention Credit is a refundable payroll tax credit ; it is not a loan that needs to be paid back. It is aimed to help employers whose businesses were impacted by the COVID-19 pandemic. Mainly, it was created to help small eligible employers with the cost of keeping staff employed.

Which Employee Wages Are Qualified for The Employee Retention Tax Credit?

The definition of qualified wages for 2020 changes slightly depending on how many employees depend on how many employees a business employed in 2019. For an eligible employer that averaged more than 100 full-time employees in 2019, qualified wages are the wages paid to an employee for time that the employee is not providing services due to either a significant decline in gross receipts or a full or partial shutdown because of a government-mandated shutdown. For eligible employers with less than 100 full-time employees, qualified wages are the wages paid to any employee under the same circumstances. However, it is imperative that these expenses were paid after March 12, 2020, and before January 1, 2022, as this is the period covered by the laws related to the Employee Retention Tax Credit .

It is also important to note that wages used to obtain Paycheck Protection Program (PPP) loan forgiveness can not also be used as qualified wages for the Employee Retention Credit.

Which Businesses Can Qualify for The Retention Tax Credit?

If you are an employer or business owner, you may be wondering if you qualify for the employee retention credit. There are some pre-requisites that must be met, such as:

Businesses that qualify for the employee retention credit under full or partial shutdown could earn a tax credit only for the shutdown period if the shutdown order had more than a nominal effect on your business operations.

You may also be eligible by calculating your business’s decline in gross receipts in during eligible calendar quarters compared to the same quarter in 2019. For quarters in 2020, an employer must have at least suffered a 50% decline in gross receipts when compared to the same quarter in 2019 to be eligible for the Employee Retention Credit. For quarters in 2021, an employer must have at least suffered a 20% decline in gross receipts when compared to the same quarter in 2019.

It is important to note that recovery startup businesses that opened after February 2020 do not have gross receipts from 2019 which they can use as a comparison. Therefore, they can use the gross receipts from the year 2020.

How Can A Business Owner File For the Tax Credit?

Employers can amend previously submitted forms by filing and submitting Form 941-x so they can retroactively claim the Employee Retention Credit. They can do so for up to three years after the original taxes were submitted.

There are countless benefits from claiming the Employee Retention Tax Credit. Business owners badly need financial assistance after the blow of the pandemic and as they face increasing costs. Reach out to one of our tax specialists today to see how your business could benefit from the credit.

The post How to Claim the Employee Retention Credit first appeared on Stentam .

The post How to Claim the Employee Retention Credit appeared first on Stentam .

How to Determine Your Employee Retention Credit Eligibility (ERC)

Sat, 07 Jan 2023 02:51:00 GMT

The Business Owner’s Guide to ERC Qualifications

By now, you’ve probably heard of the Employee Retention Credit (ERC) — the temporary payroll tax credit that rewards business owners who continued to pay employees during the pandemic. You’ve likely heard about the maximum ERC amount your business could recoup — up to $26K per employee. You may have even learned of executives in your network receiving large ERC refund checks from the Treasury Department.

You know you want your payroll tax money back.

But how do you know if your business is eligible for the Employee Retention Credit?

In this ERC Eligibility Guide, we will explain all the basic ERC Credit Qualifications and offer a step-by-step analysis to help you determine your business’ Employee Retention Credit eligibility.

Who Qualifies for the ERC Tax Credit?

Small businesses, startups, nonprofits , corporations, LLCs, and companies with less than 500 employees may be eligible for the ERC tax credit. US-based businesses across almost every industry may qualify.

In fact, the only businesses that may not qualify are companies that were able to work from home without modifying their operations. Still, those companies may be ERC-eligible if their income declined significantly.

What Are the Three Basic ERC Qualifications?

There are only three basic qualifications for the ERC tax credit. To qualify, a business must:

If your business can meet these three basic ERC qualifications, it may be eligible for the credit. However, Employee Retention Credit eligibility becomes more complicated once you begin to determine which quarters you qualify for.

Your business doesn’t have to retain an employee throughout the entire pandemic, or even a complete year, to qualify. The ERC, and payroll taxes in general, are submitted every quarter, meaning that any wages paid during that quarter, up to the wage cap, can be declared as “eligible wages.”

The rules regarding who qualifies for ERC, and how much money a business can receive, are different for 2020 and 2021 . The ERC credit qualifications for the 2021 tax year are more accessible than 2020, meaning that many businesses may qualify for a sizable ERC refund in 2021, but receive nothing for 2020.

As you can see, ERC eligibility becomes quite complicated rather quickly, which is why we recommend seeking professional assistance from a reputable tax credit provider.

Next, let’s analyze the nuances of 2020 vs 2021 ERC qualifications.

How Do You Qualify for the ERC for 2020?

To qualify for an ERC tax credit for 2020, your business must meet three qualifications:

EITHER

Congress Expands Employee Retention Credit Eligibility for 2021

The 2020 ERC proved effective, providing great benefits to individual businesses while stimulating the economy as a whole. As countless companies were drowning in pandemic shutdown orders and capacity limits, the ERC helped them remain afloat. The unexpected tax relief helped businesses retain their hardworking employees, keeping individuals out of the unemployment queue and in their valuable careers — where they can truly make a difference.

The resulting financial stimulus helped limit the pandemic’s damage to the American economy, and the federal government took notice. The U.S. Congress decided to double down on pandemic relief funds the next year, loosening ERC eligibility requirements and increasing refund values for 2021. Even if your company doesn’t meet the 2020 ERC qualifications, you may still qualify for the 2021 ERC, which is more inclusive.

How Do You Qualify for the ERC for 2021?

To qualify for an ERC tax credit for 2021, your business must meet three qualifications:

EITHER

As you can see, ERC credit qualifications for 2021 are easier to meet than those for 2020. The 2021 ERC embraces relatively larger companies and businesses that suffered less severe losses. To discover if your business qualifies for the ERC for 2020 and 2021, contact Omega Accounting Solutions — a team of tax credit experts who work with integrity to ensure you receive every ERC refund check you’re entitled to.

Common Questions on ERC Tax Credit Eligibility Requirements

Can I claim the ERC if my business did not fully shut down?

Yes, you may still be able to claim the ERC if your business never fully shut down due to government mandates. In fact, the simplest route to ERC qualification is by a decline in annualized revenue of 50% for 2020 or 20% for 2021 when compared to your revenue for 2019.

If your business did not see a significant decline in income, you may also qualify by showing how pandemic-related government orders significantly impacted your ability to do business. Common reasons to qualify by this route include limits on customer or worker capacity, social distancing orders, work-from-home restrictions, production decreases, partial shutdowns, or limited operating hours.

Can I claim the ERC if my business did well during the pandemic?

Yes, you may still be able to claim the ERC if your business did well during the pandemic. In fact, you might qualify for the ERC even if your business grew during this time. You simply must prove that your company’s operations were nominally disrupted by pandemic-related government orders, such as indoor dining bans, capacity restrictions, social distancing mandates, work-from-home orders, or even supply chain disruptions.

You might think that only restaurants can qualify for the ERC by these means, but that is not the case. Construction companies can qualify by showing that social distancing orders significantly slowed their progress on a project. Even tech companies can qualify due to the shortage of semiconductors needed to build microchips.

If your business did well during the pandemic, that only eliminates one avenue of qualification for the ERC. You should inquire with a professional ERC provider to help determine if you qualify with an impact on your business operations.

Can you get ERC and PPP?

Yes, your business may be eligible to receive an ERC tax refund for 2021 despite receiving Paycheck Protection Program (PPP) funds in the past. The Employee Retention Credit was updated with a considerable expansion to the pool of eligible businesses. Many companies, and even tax professionals, were not made aware of this update, leaving thousands of payroll tax dollars in Treasury hands that can still be reclaimed today.

Can you receive ERC funds if you are self-employed?

Yes, you may be eligible to receive ERC funds if you are self-employed, but only for wages that you paid your employees during 2020 and 2021. Self-employed individuals cannot qualify wages paid to themselves. You must have had W-2 employees on your payroll to qualify for an ERC refund, and only those payroll expenses, including employer healthcare expenses, will qualify.

Are startups eligible for the Employee Retention Credit (ERC)?

Can you claim the ERC if your business started in 2021?

Yes, startup businesses may qualify for ERC through the Recovery Startup Credit and receive up to $50,000 per quarter for quarters three and four of 2021, or as much as $100,000. To be eligible for an ERC refund as a Recovery Startup Business, your company must meet three simple qualifications:

It’s actually easier to qualify for the ERC as a recovery startup business. As a startup, your company is not subject to the declined income or government order impact qualifications.

You may even be able to maximize your ERC refund amount by qualifying for both the original ERC and the Recovery Startup Credit. Because each quarter is treated independently by the IRS, you can claim the regular ERC for one quarter and then take the Recovery Startup Credit for another quarter. Startups can claim refunds for quarter four of 2021, so they alone can potentially qualify for ERC refunds throughout that entire year. Businesses established before February 15, 2020, can only claim ERC refunds through the first three quarters of 2021.

Does My Business Qualify for ERC?

Your US-based business may qualify for the ERC if it employed less than 500 employees in 2019 and EITHER faced a nominal disruption of typical operations due to a government order OR endured a considerable loss of income during the pandemic. However, it is difficult to determine which quarters of 2020 and 2021 your business is eligible for. It is even more difficult to calculate your ERC refund amount.

Employee Retention Credit eligibility is complicated. Don’t attempt to evaluate your ERC eligibility without expert help. Your business may qualify for an ERC refund in one quarter, and be ineligible in the next quarter. If you mistakenly claim the ERC when your business is ineligible, you will have to pay the money back — likely with penalties and interest. If you don’t claim the ERC when your business does qualify, you miss out on money that you were legally entitled to.

To be certain about your business’ ERC qualifications and ensure you calculate your credit correctly, you should contact a tax credit provider that specializes in payroll tax credits.

Choose the Trusted ERC Provider

Omega Accounting Solutions is a highly respected ERC provider that works with honesty and integrity. Omega performs a due diligence double-check to ensure your business truly meets official ERC qualifications. Should your business qualify, Omega’s ERC experts know precisely how to build claims that will stand up to an audit. Omega even provides you with documents to back up and substantiate your credit if your company is audited.

Business owners should play it safe when it comes to their Employee Retention Credit eligibility. Omega is the safest choice for ERC tax credit services. Contact Omega today to determine if your business qualifies.

The post How to Determine Your Employee Retention Credit Eligibility (ERC) appeared first on Omega Accounting Solutions .

Omega Partners with One of Top Golf Influencers on Instagram

Fri, 06 Jan 2023 20:31:00 GMT

Press Release: Lauren Pacheco creates content on the benefits of ERC funds for small business owner s

IRVINE, Calif. – Omega Accounting Solutions recently announced its collaboration with golf influencer, Lauren Pacheco . Omega and Pacheco will collaborate on social content, amplifying the company’s mission to support small businesses, especially those applying for the Employee Retention Credit (ERC) program before the sunset deadline begins in March of 2023.

Pacheco became one of the most popular female golf influencers on Instagram during the COVID-19 pandemic, amassing over 146,000 followers and appearing as a guest on “The Celebrity Golf Show” on YouTube. She has a bachelor’s degree in health and wellness in addition to being a certified yoga and health coach. Earlier this year, Pacheco was invited to play in the Oakley Tournament at Waste Management Open, the opening of X-Golf in Chicago, CSE and Maxim’s Celebrity Golf Classic in Long Island, and the launch of EA Sports PGA Tour, a next gen-only video game.

“I love the work I’m doing with Omega Accounting Solutions on this campaign to educate small business owners about the financial resources available to them,” said Pacheco. “During the COVID-19 pandemic, I was unable to work in media hosting or in modeling. I decided to take up golf for my mental health and to create some fun content for social media and still be able to do what I love by entertaining others. As I built my golf brand, I have been able to partner with great companies and travel to beautiful places for tournaments.”

ERC is a refundable employment tax credit for eligible employers based on qualified wages and health plan expenses. During the economic fallout caused by COVID-19, ERC allowed employers to use the funds to continue to pay existing employees and keep business running and staff working. The program was a way for U.S. companies to stay afloat due to the shutdowns caused by the COVID-19 pandemic, but now there are millions of unclaimed dollars available and nearly any company impacted by the pandemic is eligible to claim their credit.
Omega has a history of sponsoring sports teams, including Orange County Soccer Club and Boreham Wood. This is the accounting company’s first collaboration with golf influencers. For further information, visit our About Us Page or call (949) 444-5311.

ABOUT OMEGA ACCOUNTING

Omega Accounting Solutions is an accounting and data firm that empowers small businesses to make informed business decisions through the production of accurate and timely books that yield insightful and actionable reports. The Irvine, Calif., firm founded by Jay Woods in 2007 works with CFOs, controllers, accountants and software developers to collect, integrate, analyze and present essential data that allow for healthy corporate operation and growth. In 2016, Omega launched a Business Intelligence Division to provide firms with customized programs, KPIs and continuously refreshed dashboards that allow them to connect data silos and take advantage of real-time opportunities in the marketplace. For further information, please contact us .

The post Omega Partners with One of Top Golf Influencers on Instagram appeared first on Omega Accounting Solutions .

Who Qualifies for the Employee Retention Credit

Thu, 05 Jan 2023 21:14:00 GMT

The Employee Retention Credit can be a big help for businesses that were trying to stay afloat during the height of the COVID-19 pandemic. But most people don’t know how it works, or who is eligible to claim the Employee Retention Credit.

This article will walk business owners through the steps and process to discover their eligibility and claim the payroll tax credit.

Business owners and employers suffered the brunt of the economic crisis when the pandemic hit. If you are one, then you know how difficult it was to keep employees in your workforce. The Employee Retention Credit was established to help small eligible employers around the United States with the cost of keeping staff employed. So, whether you are a small business owner you could be eligible to claim this tax credit.

What Is the Employee Retention Credit?

The Employee Retention Credit, or ERC for short, was created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It is a fully refundable tax credit filed against employment taxes. The United States government established the ERC in 2020 to assist employers, business owners, and companies in keeping employees on the payroll despite the COVID-19 lockdowns.

Later, the Consolidated Appropriations Act was passed in December 2020 as well as the American Rescue Plan Act in March 2021. These two provisions impacted the Employee Retention Credit benefits and extended its deadline, making the credit more accessible to businesses.

Who Is Qualified for the Employee Retention Credit?

Businesses that experienced the following may be eligible to receive the Employee Retention Credit:

Note: that they may be eligible for one calendar quarter but not the other calendar quarter, in the same calendar year.

Eligible companies can either be for-profit organizations or tax-exempt organizations such as a non-profit. Apart from this, they must meet one of the following conditions in 2020:

Companies must meet one of the following conditions to be considered eligible in 2021:

Who Can Benefit from the Employee Retention Credit?

The Employee Retention Credit was intended for small businesses negatively impacted by the COVID-19 pandemic. The tax credit is available to employers who may have struggled to keep their employee workforce that either:

It is important to note that governmental employers are not eligible employers for the Employee Retention Credit. However, tribal governments and tribal entities may be eligible if they otherwise meet the requirements. Additionally, self-employed individuals are not eligible for their own earnings, but they may be able to claim the credit for wages paid to their employees.

What Are the Changes and Impacts of Government Orders?

Likely, your business operations were negatively affected by the COVID-19 pandemic. Your business may be eligible to file for the Employee Retention Credit if those impacts to your business operations can be directly tied to a government order and had more than a nominal effect. Below we will list some potential government orders that could make your business eligible for the employee retention credit:

What Are the Steps to Claim the Employee Retention Credit?

Originally, qualified employers were supposed to record the Employee Retention Credit eligible salaries and receive the appropriate tax credits by filling and submitting Form 941 which is used to file the employer’s quarterly payroll tax return. However, the Employee Retention Credit is no longer applicable after the third quarter of 2021, or after October 1, 2021. Thankfully, there is still an opportunity for eligible employers to take advantage of the credit! Eligible employers can retroactively claim the Employee Retention Credit by filing and submitting Form 941-X, which is used to adjust an employer’s payroll tax return.

Note that the amended payroll tax returns can be submitted up to three years after the initial return filing deadline. So, qualified employers who wish to update their payroll tax returns still have time to finish their paperwork.

Can You Still Apply and Claim the Employee Retention Credit for 2021?

Looking at the legality of it all, the Employee Retention Credit was available until the fourth calendar quarter of the year 2021 for businesses that started after February 15, 2020. For other businesses, the Employee Retention Credit expired after September 31, 2021, but the employers who started their firm or business operations before February 15, 2020, may still be eligible to retroactively file for the payroll tax credit for 2020 and the first three calendar quarters of 2021. Employers who have any questions should reference IRS guidelines regarding when and how to claim the Employee Retention Credit based on your income tax return and if your business operations were partially suspended.

There are many benefits from the Employee Retention Credit. Reach out to one of our specialists today to learn about your business’s eligibility before the window to retroactively file comes to a close!

The post Who Qualifies for the Employee Retention Credit first appeared on Stentam .

The post Who Qualifies for the Employee Retention Credit appeared first on Stentam .

Introduction to the World of DSOs

Thu, 05 Jan 2023 19:00:00 GMT

Matt and Wendy chat with Brannon Moncreif of McLerran and Associates to introduce you to the changing world of DSOs. Find out what the changing economic environment may mean for your eventual practice transition and how to make the most of your practice value.

Episode 1 - DSOs

Could Government Orders Make My Business Eligible for ERC Credits?

Mon, 19 Dec 2022 14:52:00 GMT

When the COVID-19 pandemic hit the United States, it ushered in a series of public health measures and government orders aimed at slowing the spread of the virus. Unfortunately, this also slowed — and in many cases, entirely stopped — businesses’ earnings, which made it very difficult to continue paying employees’ wages.

In response, Congress passed the CARES Act in March 2020. One key provision of this act was the Employee Retention Credit (known as ERC) — a tax opportunity intended to give businesses economic relief so they could retain their employees. Businesses may be eligible for the ERC if they have experienced disruption due to COVID-19, including through necessary business modifications made due to government orders.

Many government orders required businesses to make changes before they could reopen their physical spaces to the public. There were several modifications required by these orders that may have impacted your business, which might mean you’re eligible for this credit — up to $26,000 per W-2 employee . At ERC Provider, we are experts at helping you obtain your maximum credit in compliance with the law.

Determining How You Were Impacted

Business owners made significant changes to ensure the health of their employees and customers during this pandemic. But in many cases, these changes were costly. Sometimes they required investing in new equipment, furniture, or technology. And often, these modifications led to fewer customers coming through the door.

But as a business owner, you kept the lights on — and your employees on the payroll. The ERC is intended to help offset that hardship and keep you on firm financial ground. If your business meets certain qualifications (more on that below), you may be eligible for this valuable credit.

Some of the modifications required by government orders prior to a business reopening to the public included:

What Makes a Business Eligible for the ERC?

Generally, your company is eligible if you were operating as a trade or business in 2020 or 2021 and at least one of the following is true: you experienced a full or partial suspension of operations due to the COVID-19 pandemic and corresponding government orders, you dealt with supply chain disruptions because vendors were impacted by government orders, and/or you saw “a significant loss of gross receipts.” For 2020, a significant loss would mean a decline of 50% based on the organization’s 2019 gross receipts and measured quarterly, while a quarterly decline of 20% would qualify in 2021. There are exceptions and nuances to these qualifications — and we can help you determine if you qualify.

If I’m Eligible, How Do I Apply for the ERC?

Designed to keep people working and businesses operating, the ERC has distributed millions of dollars to qualified businesses. But determining if you’re qualified and knowing the next steps to take can be tricky. Many of our clients are referred to us by their own CPAs and tax professionals who recognize that this is a new and specialized area that calls for expertise. This is where we come in.

We walk our clients through a few steps to simplify a complex process. All you need to do:

That’s it. If your business doesn’t qualify, it costs nothing to determine eligibility. If you are eligible, we will help you get up to $26,000 per employee on your payroll. Our service charge is calculated with your free analysis and is based on a percentage of the credit recovered. You’ll end up with thousands of dollars to help you continue running your business — many of our clients have received six-figure credits. We look forward to helping you figure out if you’re eligible too.

Three Big ERC Benefits for Business Owners

Fri, 09 Dec 2022 19:57:00 GMT

ERC Government Aid for Businesses That Survived the Pandemic

The COVID pandemic created new challenges for American businesses across all industries, and manufacturing companies were hit especially hard. According to the New York Times , nearly 22 million U.S. jobs were lost during the pandemic’s outset. Data also shows that companies in most industries are making rapid hiring efforts to recover those job losses.

To help support their recovery and stimulate the economy, eligible business owners can claim the Employee Retention Credit (ERC), a pandemic relief tax credit initially created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. Through the ERC credit, eligible businesses can receive a payroll tax refund from the Department of Treasury worth up to $26,000 per employee (ERC refunds are delivered by mail in the form of a check).

Interestingly, in a recent survey commissioned by Omega Accounting Solutions, researchers found that a large percentage of eligible businesses have not yet utilized their ERC benefits. But why are so many companies missing out on the ERC for business owners? A large number of advisors, accountants, and tax specialists were misinformed by outdated guidelines and falsely believe they don’t qualify.

Receiving PPP funds does not disqualify a company. If a business grew its revenue during the pandemic, it may still be eligible for an ERC refund. Businesses that were deemed essential and never fully shut down can qualify as well. It’s much easier to qualify for the Employee Retention Credit than many business owners realize.

Why Business Owners Should File ERC Now

Congress updated ERC eligibility guidelines multiple times in the past two years, and because of that executives should take another look at their ERC qualifications. Business owners that never looked into it, should as well. This is an opportunity to increase financial resources through a temporary stimulus program designed for small-to-medium-sized businesses. Do not miss out on the benefits of the ERC for business owners. Here are three reasons to file for ERC now .

1. Business Owners Could Receive up to $26,000 Per Employee

When first introduced as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020, the maximum credit allowable under the ERC was $5,000 per employee. With its renewal and expansion last year under the Coronavirus Response and Consolidated Appropriations Act, the full credit increased by an additional $21,000 per employee.

Many business owners’ favorite feature is that it’s not a future credit against next quarter’s tax liabilities — it’s a tax refund paid with a paper check mailed from the Treasury Department. Not all businesses will qualify for the maximum amount, but ERC benefits can still make a world of difference to a company’s bottom line.

2. ERC Benefits Are for Businesses that Survived the Pandemic

ERC qualifications favor business owners that either lost income during the pandemic or were impacted by government orders — especially those with less than 500 employees. If your business meets just one of the following qualifications, it is likely eligible to claim the ERC.

A. Substantial Decline in Revenue

The easiest way for business owners to qualify for the employee retention credit is with a decline in revenue. Companies that lost income in 2020 or 2021, when compared to the same quarter in 2019 can qualify for ERC.

Originally, businesses had to experience a 50% revenue decline from 2019 to 2020, quarter for quarter. That threshold was substantially lowered to a 20% decline in 2021 when compared to the corresponding quarter of 2019. Please note that ERC benefits are only available for the first 3 quarters of 2021.

Business owners that did not see a revenue decline — even those that grew their business during the pandemic — may still be eligible for the ERC. Continue reading below to learn how.

B. A Government Order Impacted Business Operations

Many business owners had to comply with pandemic-related government orders that forced them to modify procedures, making it more difficult (and in some cases, more expensive) to operate.

Companies in many states faced disruptive government mandates while already dealing with economic and staffing issues. Your business likely qualifies for the ERC government aid if pandemic mandates disrupted your business operations in one of the following ways:

3. The Window to File for ERC Credit Ends in 2024 & 2025

When Does the ERC Credit End?

While there is still time for business owners to file for ERC, the window is finite. The first deadline to file for the Employee Retention Credit is on April 15, 2024. After this date, you can no longer claim the tax credit on 2020 taxes. The ERC deadline for the 2021 tax year is April 15, 2025.

While the window for ERC credit filing ends in 2024 and ‘25, Congress has the power to end this pandemic tax credit at any time — hence why it’s so important to file ERC now, while you still can.

Claim ERC Benefits With an Experienced Provider

As a business owner, you work hard to give your company every possible advantage. Don’t disregard temporary ERC benefits without checking if you qualify. Omega Accounting Solutions can quickly determine if your company is eligible for ERC government aid, and handle the entire filing process for you.

Omega has been in business for over 15 years and has experience in multiple tax incentives for business owners. Omega’s tax credit experts have already filed ERCs for thousands of clients. They handle the entire process from start to finish including document collection, financial & impact analysis, credit calculations, ERC filing, and follow-up documentation. They perform due diligence on your company’s financial picture to ensure compliance with ERC qualifications .

Do not miss out on the many benefits of the ERC for business owners. Contact Omega today to find out if your company qualifies for the Employee Retention Credit.

The post Three Big ERC Benefits for Business Owners appeared first on Omega Accounting Solutions .

IRS Warns Employers to Beware of ERC Scams

Wed, 16 Nov 2022 21:05:00 GMT

Some Tax Credit Providers Practice Employee Retention Credit Abuse

The Internal Revenue Service recently advised businesses to proceed with caution when engaging with tax credit companies instructing them to claim Employee Retention Credits they may not qualify for. Some third-party tax credit specialists submit incorrect ERC claims on behalf of unknowing clients, many of which amount to ERC fraud.

Most ERC scams are perpetrated by cottage-industry companies that rush to process your ERC credit without proving your business truly qualifies. Even worse, some will overclaim your credit in order to pocket a larger amount from your ERC refund. Most firms that practice Employee Retention Credit scams started up in the last two years specifically to abuse the ERC program. Should your business be audited in the future, these ERC scammers will not be around to account for their work.

In the IRS news release , Washington officials affirmed that businesses are always liable for their tax reports, and any company involved in an Employee Retention Credit scam will be responsible for future repayment with penalties and interest.

Is the ERC Credit Legit?

In and of itself, the Employee Retention Credit is not a scam. The ERC is a legitimate payroll tax credit still accepted by the IRS today. Created by the CARES Act to incentivize employers to retain workers throughout the pandemic, the ERC can still be claimed retroactively by amending payroll taxes from 2020 and/or 2021.

While the ERC is a real tax credit providing real tax refund checks to companies across the country, there are many illegitimate “ERC mills” advising businesses to claim credits they may not be entitled to.

Employee Retention Credit Scam Alert

By now, you have probably encountered an ERC advertisement on the radio or internet. ERC ads typically tout the maximum credit of $26,000 per employee. Many of these ads come from legitimate companies that service multiple tax credits with accuracy and integrity.

However, some inexperienced “ERC specialists” have popped up in the last year or two that seek to maximize their commissions at your expense.

How Does ERC Fraud Work?

Employee Retention Credit fraud is perpetrated in a few different ways. Some ERC providers make it standard practice to stretch the limits of tax law. Some may conduct honest work but take advantage of unsuspecting clients to pad their profit when the opportunity arises. In other cases, ERC fraud is committed unknowingly by in-house bookkeepers or accountants who lack experience with the ERC.

Many tax credit providers offer to determine whether your company qualifies for the ERC free of any up-front charges, instead taking a percentage of your tax refund once it is processed. The company will collect your relevant tax documents, conduct their due diligence, and make the necessary ERC calculations — and they may find your business ineligible for the ERC.

At this point, they have invested significant man-hours in your case for no payment in return. Unwilling to take the loss, ERC scam companies will instead claim that you do qualify, without providing the necessary evidence to the IRS. Unaware of this, you will be happy to learn you qualify for a sizable ERC refund check and send a percentage of it to your service provider. But if the IRS investigates your claim or your company is audited, you could be subject to tax penalties and interest.

If you encounter an Employee Retention Credit scam, you can report the information to the IRS using Information Referral Form 3949-A .

Will Your ERC Stand Up Against IRS Auditors?

Claiming the Employee Retention Credit requires more analysis than just your payroll records — it’s not just a simple calculation and objective qualifications. Claiming the ERC involves open-ended eligibility guidelines that require employers and tax credit servicers to make subjective decisions that have serious financial implications. Partial suspensions, more than nominal impact, and other variables are all open to interpretation. This subjectivity makes the ERC susceptible to misjudgment, abuse, and even fraud.

Because of this gray area, the IRS will likely treat larger ERC claims with extra scrutiny. Claiming this tax credit without documented evidence will leave you vulnerable in a future IRS audit — especially if your ERC refund amount is in the millions.

You Need Documentation Showing Your ERC Qualifications

Would you be able to remember each of your ERC qualifications several years from now? Keeping a detailed record of each ERC calculation and decision is the key to avoiding tax penalties. You must have an airtight document justifying your ERC claim that you can reference in an audit. If you qualified with declined revenue, you need your P & L statements on record. If you own multiple companies, you must show you aggregated the business’ income. If you qualified with an operations impact due to government order, you need a record of the relevant orders and proof of your modified operations.

If your payroll provider or tax credit specialist filed the ERC on your behalf, you must ensure they provide you with such documentation. ERC providers who do not provide these audit-defense documents are, at best, leaving their clients at risk. At worst, they are running an ERC scam.

Four Questions to Ask Your ERC Provider

With all this concern about ERC scams, you must properly vet your ERC provider before doing business with them. Before agreeing to anything, ask the tax credit specialist the following questions to ensure their service is honest and accountable.

1. How long have you been in business?

Many ERC providers have started up in the last two years, and these are typically the companies susceptible to ERC abuse. They don’t have the experience to make good judgments on open-ended ERC qualifications, and they likely don’t have the manpower to delve deeply into your business’s operations. The worst providers don’t really care if you truly qualify, because they will close up shop once the ERC expires.

2. Do you provide other tax credits or only the ERC?

The ERC has made tons of money available to businesses via tax refunds. Looking to get their piece of the take, a large number of ERC-only companies have popped up. These “ERC mills” rush to process as many ERCs as they can without conducting due diligence on their clients. If a company’s only service is ERC, it is possible they run an ERC scam.

3. What percentage of your clients do not qualify for the ERC?

If a tax credit provider qualifies close to 100% of their clients, they run an abusive practice. Simply put, not all companies qualify for the ERC, and if your company doesn’t qualify, it doesn’t qualify — period. If a provider is willing to bend the rules to make you qualify, they practice ERC fraud.

4. Do you provide supporting ERC documentation?

All legitimate tax credit companies provide defensible documents you can utilize in an audit. If your ERC specialist does not provide these documents, they may not be checking clients’ ERC qualifications at all. If they can’t “show their work” proving your company qualifies, how can you prove it to the IRS?

Omega Accounting Solutions Provides Trustworthy ERC Service

Omega Accounting Solutions performs a due diligence double-check for every client and prepares an audit-protection packet to defend each ERC claim. Omega does not run an ERC scam; they work with honesty and integrity to ensure your business truly meets the IRS’s official ERC qualifications. If your company qualifies, Omega’s tax credit experts know precisely how to build your ERC claim to easily survive an audit. Founded in 2007, Omega services multiple tax credits, including the Employee Retention Credit and Research and Development (R&D) tax credit.

The Employee Retention Credit is real. So are the unscrupulous “ERC Mills.” Don’t miss out on money you are entitled to for retaining your employees during the pandemic. Choose an ERC provider that offers multiple services to support you for years to come. Choose a trusted advisor that you can count on — choose Omega .

How to Select an ERC Partner You Can Trust

The post IRS Warns Employers to Beware of ERC Scams appeared first on Omega Accounting Solutions .

Cannabis Businesses Can Qualify for CARES Act Help

Wed, 09 Nov 2022 13:28:00 GMT

Due to significant differences in state and federal law, Cannabis businesses operate under very different and sometimes significantly complicated strictures that other, more traditional businesses don’t need to navigate.

But there is a program that we’ve seen serve as a true lifeline to businesses, including cannabis businesses as they survive and thrive through the pandemic.

The federal response to the COVID-19 crisis, specifically The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), presented often deeply needed opportunities to businesses across the country to recover lost revenue and support their efforts to keep the lights on through the pandemic and beyond.

Because many of these programs, like the well-publicized Paycheck Protection Program (PPP) program, are structured as deductions from federal tax or credits on income tax paid, Cannabis businesses, especially those involved in manufacturing, are not eligible.

The Employee Retention Credit, or the ERC, is different. Structured as a payroll tax credit, the ERC is available to cannabis businesses that meet the program’s requirements and can deliver potentially significant recovered costs to businesses with W-2 employees.

How does it work?

The ERC program was created under the CARES act to reward business owners who retained employees during the COVID-19 pandemic.

Since its creation, the program was expanded to enable business owners who previously qualified for PPP loans to take advantage of the payroll tax credit. The program does not require a reduction in revenue, only an impact on the business by the COVID-19 crisis.

You can qualify if you faced issues such as reduced hours of operation, supply chain interruption, equipment shortages, or reduction in capacity in a retail space.

What about 280E?

If you know 280E, you’re certainly familiar with the ins and outs of the cannabis business. This is the federal tax code that prohibits cannabis businesses from utilizing deductions and credits on income tax paid.

Because the ERC program is structured as a payroll tax credit, cannabis businesses may be able to take advantage of the program presuming they otherwise qualify for the credit.

We’ve worked with our processing partner across a wide swath of industries over the past year to successfully claim $6B in ERC credits. We know the process inside and out and are uniquely positioned with expertise and experience to successfully get this done for your business, too.

How do I qualify?

There are three possible ways for you to qualify.

1. Revenue Reduction

If you experienced at least a 50 percent reduction in gross sales for one quarter in 2020 compared to the same quarter in 2019, you qualify. The qualification ends when your revenue reduction rises back to 80 percent of the 2019 level. For 2021, you can qualify with just a 20 percent reduction from the same quarter in 2019.

2. Supply Chain Disruption

If you had a supply chain disruption resulting from a government suspension order to one of your suppliers that resulted in that supplier not being able to deliver critical goods to you, you may qualify. The impact of that disruption must be more than “nominal” or, more than 10 percent, on business operations.

3. Shutdown Impact

This qualification is based on a “suspension test” to demonstrate that your operations were partially or fully suspended due to a COVID-19 governmental order. It is possible that your business felt an impact even if the government shutdown was not ordered directly to you. For example, an insurance agent or agency who gained all of their business by visiting doctors’ offices and hospitals may have seen an indirect impact because those visits were no longer allowed. The impact must be more than 10 percent on business operations compared to the same time in 2019.

How does the application process work?

With ERC Provider, qualifying begins simply with a phone call. Once you upload your documents through our secure web service, we’ll evaluate and analyze your application and get all your paperwork prepared to file. Just sign the forms and wait for your refund check. There’s no charge for our initial analysis, so it’s worth the time to find out if your cannabis business can qualify for these valuable credits.

ERC Tax Credit Advance: How to Get Cash for Business Now

Mon, 07 Nov 2022 21:00:00 GMT

Omega Offers Employee Retention Credit Advance Loans

The Omega team is excited to announce the official launch of its new ERC advance loan service. Omega Funding Solutions (OFS) brings small business lending to companies that claimed the Employee Retention Credit, but cannot afford to wait up to a year for their ERC refund money. OFS helps small and mid-sized businesses cover day-to-day expenses while they await their tax refund. Existing clients, businesses that have not yet claimed their credit, and companies that filed with other processors are all eligible for an ERC bridge loan from OFS.

What Is Omega Funding Solutions?

Omega Funding Solutions (OFS) is an experienced commercial business lender that provides fast bridge loans for businesses that qualify for the Employee Retention Credit . OFS is a new division of the long-standing accounting-consulting firm Omega Accounting Solutions . The new service allows small and medium-sized businesses to borrow advance funds against their anticipated ERC refund. OFS provides an immediate cash infusion to help your business get back to doing what it does best.

What Is an ERC Tax Credit Advance?

ERC tax credit advance loans provide an immediate cash infusion to companies that qualify for the Employee Retention Credit , but cannot afford to wait through long ERC refund processing times. The IRS takes about six to nine months to process a claim, and many companies wait up to a year for their refund check to arrive. Most businesses are still contending with a weak economy left over by the pandemic, and some need help covering extra expenses while awaiting their ERC credit money.

An ERC advance payment can help bridge this gap, providing borrowers with up to 60% LTV of their expected tax refund amount. Clients can keep their business running strong by using the ERC advance loan to cover any expenses, compensate employees, pay debts, or invest in new products.

How Do ERC Tax Credit Advances Work?

ERC tax credit advance loans are made to companies that qualify for the Employee Retention Credit, using only the anticipated tax refund as loan collateral. While the IRS takes six to nine months to process ERC claims, and up to a year to disperse the tax refund, ERC loans provide advance funds to businesses that need cash now. Almost any business with a valid ERC claim is eligible to borrow from a tax credit loan provider such as OFS.

Receiving an ERC credit advance is simple. First, OFS will collect your company’s ERC information and examine your ERC claim , which may take up to four weeks. Once approved, it takes about three days to process your loan and as little as ten for funds to disburse. Once approved, borrowers begin making monthly interest-only payments, ending with a balloon payment once their ERC money arrives.

What Is the Timeline for ERC Advance Payment?

Existing Clients

If you already have an ERC claim processed by Omega Accounting Solutions, financing is usually approved immediately, with loan closing in as little as three days. Funds will reach your account in as little as 10 days.

New Clients

If you have not yet claimed the ERC or filed it with a different processor, we will process your claim or review your existing qualifications and disburse your ERC advance in as little as 30 days.

Why Choose OFS for an ERC Tax Credit Advance?

Omega Funding Solutions works closely with your team to ensure you truly meet all ERC qualifications. They conduct a due diligence check to provide audit protection documents to each client. If you’ve already filed for the ERC with a different processor, Omega will double-check your claim for accuracy, providing further protection in case you’re audited in the future. OFS small business bridge loans are fast, flexible, and equitable, with no upfront fees. OFS serves typical borrowers and under-resourced clients including low credit, the self-employed, and corporations/LLCs.

How Do I Get an ERC Advance Loan?

If you believe your company may qualify for the Employee Retention Credit, Omega Accounting Solutions can provide a free, 10-minute consultation to get the process started. If your company is found to be ERC-eligible, they will file on your behalf. Then, Omega Funding Solutions can provide an ERC advance loan to help your business thrive immediately.

If your business already has a valid ERC claim, you can likely qualify with OFS — even if you used another ERC processor. Contact Omega Funding Solutions and enjoy your ERC advance payment in as little as 10 days!

The post ERC Tax Credit Advance: How to Get Cash for Business Now appeared first on Omega Accounting Solutions .

How COVID-19 Lockdowns May Have Impacted Essential Business Employers

Sun, 30 Oct 2022 23:35:00 GMT

When COVID-19 cases started growing exponentially in the spring of 2020, many companies – and even entire industries – had to figure out what it meant to be an “essential business” overnight.

Some cases were very clear. Hospitals, pharmacies, utility companies, and grocery stores had to remain open for the health and safety of the public. Spas, movie theaters, bars, and music venues were not essential to public welfare, so they were closed during government shutdowns.

But there was confusion for many organizations, who were stuck trying to determine if all or part of their business was classified as “essential.”

If you were one of these employers who operated an essential business during COVID-19 lockdowns, you may have some questions.

If my company was deemed an “essential business,” can I still qualify for the Employee Retention Credit (ERC)?

The short answer is: maybe.

Because your organization was considered an essential business, you were able to remain open during COVID-19 lockdowns. If the government ordered all of your business functions to remain open, you would not be considered to have a full or partial suspension of operations.

However, although essential business employers like you didn’t typically experience a full or partial suspension of operations, your business may still have been impacted. You could potentially be considered to have a partial suspension of operations if, “under the facts and circumstances, more than a nominal portion of [your] business operations are suspended by a government order.” ( IRS website ).

One example would be if you have both essential and non-essential business operations. If both functions make up more than a nominal portion of your business and a shutdown order fully or partly impacted your ability to operate, you may be considered to have a partial suspension even if the essential portion of your business operations was unaffected.

For instance, if you own a real estate company that offers interior design and staging services for clients as well, the real estate transaction portion of your organization would be deemed an essential business and unaffected by a lockdown order. But the interior design and staging services portion may not be considered essential and, if not, would be partially or fully suspended. If that service involves more than a nominal portion of your business operations, you may qualify for the ERC.

Another possible scenario which may make you ERC-eligible? If your essential business was required to close for a period of time during normal working hours by a government order, that may qualify as a partial suspension of operations.

How Do I Know if the Non-essential Portion of My Business is More Than “ Nominal? ”

A look at the IRS regulations can help determine if the non-essential side of your business constitutes more than a nominal portion of your operations.

Solely for purposes of the ERC, “a portion of an employer’s business operations will be deemed to constitute more than a nominal portion of its business operations if either (i) the gross receipts from that portion of the business operations is not less than 10 percent of the total gross receipts (both determined using the gross receipts of the same calendar quarter in 2019), or (ii) the hours of service performed by employees in that portion of the business is not less than 10 percent of the total number of hours of service performed by all employees in the employer’s business (both determined using the number of hours of service performed by employees in the same calendar quarter in 2019).” ( IRS website ).

It can be confusing to figure out on your own. But it’s worth checking to see if you qualify. You could receive a credit of up to $26,000 per employee on your payroll. If you work with us, we first determine your eligibility through a free analysis. Then, if you qualify, we gather your payroll information and necessary forms to determine the credit amount. Finally, we prepare the paperwork and finalize the details.

That’s it.

The post How COVID-19 Lockdowns May Have Impacted Essential Business Employers appeared first on ERC Specialists .

Who Does NOT Qualify for the ERC?

Sun, 30 Oct 2022 23:28:00 GMT

Although ordinary life was disrupted and many business operations were fully or partially suspended by COVID-19 lockdown orders, there were plenty of employers whose organizations were already structured in a way that allowed work to continue as usual – and there were many companies who quickly pivoted to telework and maintained normal operations.

Maybe your company headquarters was closed by a government order, but your employees were able to work remotely from home and perform all their necessary job functions. Or perhaps you adjusted their job functions to fit the reality of telework. In either case, if your organization was able to continue operating similarly to how you worked before the shutdown, your operations would not be considered fully or partially suspended due to a government order.

Other companies, including some essential businesses, had no problems obtaining necessary supplies and were not required to shut down, reduce capacity, reduce services or stop traveling for work.

If this was the reality for your workplace, you probably would not qualify for the Employee Retention Credit (ERC).

However, if the closure of your physical workplace resulted in the suspension of business operations for certain purposes, you may be eligible. The best way to find out if you may qualify is to speak with an ERC Specialists Affiliate. They will help you as you fill out our questionnaire, to ensure that you consider all of the impacts of COVID shutdowns on your business.

How Do I Find Out if I’m Eligible?

With a credit of up to $26,000 per employee on your payroll available, it’s important to know if your business qualifies for the ERC.

Determining eligibility – and knowing what to do next if you do qualify – can be difficult. This is a highly specialized area of tax law.

But we have helped clients in all 50 states figure it out.

Many of our clients have come to us at the recommendation of their own CPAs and tax professionals, who know this is our niche. We are professionals who are totally focused on the ERC.

This process can be complex, but we distill it by partnering with you and breaking it down to a few easy steps:

It’s that simple.

How Does ERC Specialists Get Paid?

If our analysis determines that you aren’t eligible to receive the ERC, the review costs you nothing. It does, however, ensure that you don’t leave money on the table.

If we assist you in determining that you are eligible, our service charge is calculated along with your free analysis so you can see what you would receive as a credit and the percentage of the credit recovery that we would be paid. We’re only paid when you receive your credit. And our service fee is typically 15% of the credit amount.

We take the steps necessary to maximize the amount your company may qualify for, up to $26,000 per payroll employee. Many of our clients have received six-figure or seven-figure ERC credits. At the end of the process, you’ll have thousands of dollars to help you continue to run your business.

There’s no risk, very little effort, and only positive outcomes.

Either you’ll discover that you aren’t eligible and gain the peace of mind that comes with our expert analysis – or you’ll learn that you do qualify and you’ll take the first steps toward claiming your credit.

We’ve helped thousands of businesses across the country and in many different industries recover over $4.7B for more than 100,000 qualified employees. We’re looking forward to helping you too.

The post Who Does NOT Qualify for the ERC? appeared first on ERC Specialists .

Your Complete Guide to the Employee Retention Credit (ERC)

Tue, 25 Oct 2022 19:54:00 GMT

The COVID-19 pandemic brought unprecedented challenges to businesses of all sizes across the country. Companies in almost every industry were adversely affected by new government regulations like social distancing mandates, customer capacity limits, and work-from-home orders. As businesses were forced to modify their operations to comply with the new regulations, consumers were also ordered to stay home and go out for necessities only.

The economy began to suffer immediately. U.S. GDP fell by nearly 9% in the second quarter of 2020, and almost 10 million American jobs were lost by the end of the year. A recent survey reports that 83% of business people agree — the early 2020s have been the worst time for small businesses since the Great Depression.

To help limit the economic damage and support American families, workers, and small businesses, the U.S. Congress passed a $2.2 trillion stimulus bill called the Coronavirus Aid, Relief, and Economic Security Act (CARES). The CARES Act created a range of temporary pandemic relief funds to support American families, furloughed workers, unemployed individuals, small businesses, corporations, and healthcare providers. It still stands as the largest financial rescue package in our nation’s history. One important component of the CARES Act is a special government tax credit called the Employee Retention Credit (ERC).

Table of Contents

What Is the Employee Retention Credit (ERC)?

The Employee Retention Credit (ERC) is a refundable payroll tax credit created under the CARES Act that rewards businesses for keeping employees on their payroll throughout the pandemic by awarding up to $26,000 for each W-2 employee a company retained. The purpose of the ERC tax credit is to support employers with funds to keep their businesses running and keep staff working amid the economic fallout caused by the Coronavirus. This pandemic tax credit is a life-preserver for U.S. companies to stay afloat following the sea of shutdowns, capacity limits, and stay-at-home orders caused by COVID-19.

Today, there are millions of unclaimed dollars available, and nearly any company impacted by the pandemic may be eligible to claim their credit. A business doesn’t have to be struggling at this very moment to qualify.

How does the ERC work?

The Employee Retention Credit is a pandemic tax credit that has been updated multiple times in its 3-year existence. To apply for this payroll tax relief, companies file a payroll tax amendment by submitting IRS Form 941-X for every quarter they retained employees in 2020 and 2021. Many companies are eligible to receive up to $5000 for each employee in 2020 and up to $7000 per employee for the first three quarters of 2021 (up to $21,000). In total, your business may be able to receive up to $26,000 per employee on payroll throughout those two years.

However, the ERC tax credit gets more complicated, and certain IRS rules keep many companies from receiving the maximum amount. To ensure only the most deserving companies receive pandemic relief funds, the IRS placed strict regulations on who can qualify for the ERC.

The IRS examines your payroll on a quarterly basis, meaning that your company may qualify for the ERC for one quarter, but not the next. Only qualified wages are counted towards your ERC refund for the quarter in question. Wages are qualified by determining if they were subject to federal payroll taxes. Put more plainly, only wages paid to W-2 employees (or spent on employee healthcare) will qualify. If your company received loans from the Paycheck Protection Program (PPP), those wages will not count towards your ERC refund. Wages paid to the majority business owners and their family members will be removed from your ERC assessment as well.

Who Qualifies for the ERC Tax Credit?

Businesses across almost every industry may qualify for the Employee Retention Credit. Small businesses, startups, nonprofits , corporations, LLCs, and companies of less than 500 employees are eligible for the ERC tax credit.

There are only two qualifications for the ERC. To qualify, a business must first employ less than a certain threshold of full-time employees. Second, the business must have either faced a nominal disruption of its typical operations mandated by government order OR endured a considerable loss of income during the pandemic.

Another complexity of ERC qualification is that your business doesn’t have to retain an employee throughout the entire pandemic, or even a complete year, to qualify. The ERC, and payroll taxes in general, are submitted every quarter, meaning that any wages paid during that quarter, up to the wage cap, can be declared as “eligible wages.”

As you can see, ERC eligibility becomes quite complicated rather quickly, which is why we recommend seeking assistance from a reputable tax credit provider.

ERC 2020 vs ERC 2021 Qualifications

The rules regarding who qualifies for the ERC, and how much money a business can receive, are different for 2020 and 2021 . The ERC qualifications for the 2021 tax year are more accessible than 2020, meaning that many businesses may qualify for sizable ERC refunds in 2021, but receive nothing for 2020.

Do startups qualify for the Employee Retention Credit (ERC)?

Startup businesses can qualify for the ERC through the Recovery Startup Credit and receive up to $50,000 per quarter for Q3 and Q4 of 2021, or up to $100,000 in total. To qualify for an ERC refund as a Recovery Startup Business, your company must have started on or after February 15, 2020, employ one or more W-2 employees, and may not exceed $1 million in annualized revenue.

The ERC is very friendly to businesses started during the pandemic. In fact, it’s much easier for startups to qualify for the ERC — they are not required to meet the declined income or government order impact qualifications.

How Much Money Can You Receive through the ERC Tax Refund?

In total, your business can potentially receive an ERC tax refund of up to $26,000 per W-2 employee from the IRS. A logistics company from Chicago, Illinois with 85 employees recently received a $1.6 million ERC refund. An electrical contractor from Bryan, Texas with 130 employees qualified for a $2.6 million ERC refund check.

Not all companies will qualify for the full amount, and the qualifications differ from 2020 to 2021.

For example, if your business had 65 employees in 2021, you could receive up to $455,000 back from the IRS.

How much money can I get from the ERC?

You can instantly view an estimate of your potential ERC refund amount using the Omega Employee Retention Credit Calculator . Using our ERC calculator is quick and easy, but it is not a definite quote. To receive a more accurate ERC calculation, sign up to be contacted by our team of tax credit professionals using the form in the upper right corner of the webpage.

How are payroll wages qualified for the Employee Retention Credit?

Payroll wages are qualified for the Employee Retention Credit simply by determining if the wages were subject to federal payroll taxes. In other words, only wages paid to W-2 employees will qualify. Wages paid to the majority business owners and their family members will not qualify, nor will wages paid using PPP funds. You can claim wages paid to full-time or part-time employees, and eligible wages are capped at $10,000 per individual for the year. You can recapture 50% of that for 2020, and 70% for 2021.

How Is the ERC Credit Paid?

The ERC credit is a tax refund paid to businesses through a paper check mailed from the IRS. It is not a future credit against the next quarter’s tax liabilities — it’s cash in your company’s pocket. Business owners are free to use their ERC refund check as they please.

Are there any restrictions on how you spend the ERC refund?

No, there are no legal requirements regarding how you spend your ERC refund check. The ERC is a tax refund — not a government loan or grant. This means that business owners are free to invest the ERC money to expand their company, pay business expenses and debts, or simply take the money home as profit. The IRS cannot penalize your business for spending its ERC money in a particular way — it’s your money to spend as you see fit.

Is the ERC a loan or grant?

No, the ERC is not a loan or grant. It’s a refundable tax credit — the IRS refunds you a percentage of the cash you have already paid in payroll taxes. The ERC differs from PPP because you do not have to pay back any amount of your ERC refund, nor apply to have it “forgiven.” Once you receive the refund check, you are free to spend it how you see fit.

Is the ERC refund taxable?

Your ERC refund does count as taxable income — it’s just like any other income for your business. You will have to pay business income taxes on your ERC refund check at the end of the quarter.

How long does it take to receive the ERC refund check?

Due to backlogging at the Internal Revenue Service (IRS), it typically takes about six to nine months to receive the ERC refund check. There are only three ERC processing centers that serve the entire nation, leading to long ERC wait times. That’s why it’s critical to have tax credit experts on your side who can quickly process your claim. The sooner your 941-X is submitted to the IRS, the sooner you can receive your refund check.

As your ERC provider, Omega Accounting Solutions can submit your amended payroll tax return to the IRS in as little as 30 days from onboarding. We can typically move as fast as you can provide the required documents and information.

Can I fast-track my ERC Refund Timeline?

The ERC backlog causes some companies to wait an entire year for their refund check. There is no magic method to speed up IRS processing times, but you can receive an ERC advance loan from a specialized tax credit provider. If your company cannot afford to wait through ERC refund delays, Omega Funding Solutions (OFS) can provide a quick business bridge loan against your ERC credit, up to 60% LTV of your expected refund amount. All you need to qualify for an OFS bridge loan is a valid ERC claim in process at the IRS.

Do employees benefit from ERC?

Because the ERC is a payroll tax credit, the tax refund is paid to the employer. Employees do not benefit directly from the ERC. However, they may benefit indirectly as the employer can use their refund money to continue paying employees or create new employment opportunities by expanding the business.

Is There a Deadline for ERC Submission?

There are two deadlines to submit your ERC claim, one for claims made on 2020 taxes, and one for 2021 taxes. For all quarters of 2020, the ERC deadline is April 15, 2024. For all quarters of 2021, the ERC deadline is April 15, 2025. The April 15 tax deadline applies to the previous year’s taxes (i.e. the deadline for tax year 2022 falls on April 15 of 2023), and businesses have three years to retroactively claim an ERC refund on taxes paid during the pandemic.

While the ERC filing window closes in 2024 and 2025, the U.S. Congress can also choose to end this pandemic tax credit at any time. That’s why it’s critical to file your amended payroll tax return claiming the ERC as soon as possible.

Can you still apply for the Employee Retention Credit in 2023?

Yes, you can still apply for the ERC in 2023 by submitting an amended payroll tax return claiming the Employee Retention Credit for the specific quarters in which your company qualifies. You must file form 941-X tax amendments within three years of the tax deadline for the quarter you wish to claim ERC.

How Do I Check My ERC Refund Status?

You can call the IRS and check on the status of your refund. They will provide a general update if they received the form. However, the IRS generally has long hold times due to a shortage of phone operators. We recommend checking the status of your ERC claim online. If your ERC provider has a CAF number, they can log into the IRS portal and check your ERC refund status.

What Is a CAF Number?

A CAF number is a unique nine-digit identification number that the IRS uses to keep track of authorized third-party tax service providers. It stands for Centralized Authorization File, and all legitimate tax servicers must have a CAF number in order to submit legal documents to the IRS on your company’s behalf. Before you choose an ERC provider, ask if they have an authentic CAF number. This ensures they are authorized by the IRS to provide tax services.

Do I Need an ERC Provider to Claim the Employee Retention Credit?

Some internal accountants have claimed the Employee Retention Credit without outside assistance, however, we recommend seeking guidance from a professional ERC provider. As you can see from the application process described above, amending your payroll tax return with IRS form 941-X can be quite complicated.

We recommend consulting an experienced tax incentives advisor to help determine if your company qualifies and guide you through the ERC claims process.

Contact an ERC Specialist

The tax credit professionals at Omega Accounting Solutions can handle the entire ERC application process for you. Omega’s ERC experts know precisely how to build ERC claims that will easily survive an audit. They’ve already secured tax incentives for clients in nearly every industry.

Omega Accounting is not just another ERC specialist. They perform due diligence on your company’s financial picture to ensure compliance with IRS rules. Should your company ever be audited, you can rest assured that your ERC claim is honest and accurate. Omega specializes in helping small-to-medium-sized businesses maximize their efficiency through Business Intelligence, fractional accounting, analytics, and tax credits. With Omega, all you have to do is provide the relevant documents, wait for the IRS to process your claim, and collect your ERC refund check.

How to Choose an ERC Specialist Provider

The post Your Complete Guide to the Employee Retention Credit (ERC) appeared first on Omega Accounting Solutions .

How does the ERC apply to government-related entities like CVBs and DMOs?

Thu, 13 Oct 2022 13:12:00 GMT

While the COVID-19 pandemic impacted nearly every area of life in the United States (and across the globe), there were a few industries where normal business operations were almost entirely stopped. Outside of healthcare, perhaps no industry was more seriously affected than travel and hospitality.

Convention and Visitors Bureaus (CVBs) and Destination Marketing Organizations (DMOs) felt the economic and operational pressures of the pandemic keenly. As not-for-profit organizations primarily funded by hotel occupancy taxes through their local government, CVBs and DMOs exist to strengthen the economic development of their regions through tourism, event planning, and convention sales. By promoting options for meetings, conventions, and other gatherings, these organizations increase revenue and public interest in their areas.

Because CVBs and DMOs are meant to drive travel and hospitality revenue, naturally government shutdown orders and other measures had a huge impact on both their operational ability and their bottom line. Between social distancing requirements, more stringent cleaning procedures, and the rise of remote work and virtual conference options, these organizations were severely impacted by the COVID-19 pandemic.

Since these organizations are often primarily but not wholly funded by their local governments, they fall into a gray area known as “government-related entities.” So – for the purposes of the employee retention credit – how does a CVB or DMO determine if it is considered an “instrumentality” of the Federal, state, or local government?

The IRS uses six factors used to determine if an organization is a “government instrumentality.” These factors include:

According to IRS Rev. Rul. 57-128, 1957-1 C.B. 311. “No one factor is determinative; instrumentality status is based on all the facts and circumstances. These same factors apply to identify an instrumentality of the Federal government, or of a State or local government, for purposes of the employee retention credit.”

Is my business eligible for the ERC?

It’s vital to know if your business qualifies for the ERC. Otherwise, you’re leaving up to $26,000 per payroll employee on the table.

But this is a highly specialized area of tax law, so it can be difficult to determine eligibility even for CPAs. And if you do qualify – then what? Understanding the process is imperative.

That’s where ERC Provider excels.

We’ve helped clients across the country figure it out. Many of our clients are referred to us by their own CPAs, who recognize that this is a niche. We are tax experts solely focused on the ERC.

If you complete our evaluation form and our analysis shows that you qualify, we simplify a complex process. We walk you through what you need for payroll information and 941 forms so we can calculate your credit, and we pair you with one of our specialists to prepare the paperwork and finalize the details.

And just like that, you’re done! Easy, right?

7 Common Mistakes to Avoid Before Claiming the Employee Retention Tax Credit

Wed, 12 Oct 2022 13:25:00 GMT

We get it – as a business owner, anything to do with taxes can be incredibly intimidating. And filing for a tax credit like the Employee Retention Credit? That’s on a completely different level. A lot is at stake. What if the IRS decides to do an audit and they determine that you need to return the funds you received? That could cost your business extra legal and tax specialist fees on top of the mandated return of funds. What a headache.

But at the same time, your business could be missing out on up to $26,000 per qualifying employee through ERC. That’s a lot of money that you can pour back into your business as you see fit! Stenson Tamaddon has already helped over 4,000 businesses receive over $3.4 billion in credits and, needless to say, we’ve seen a lot of eager business owners make mistakes in the wake of their excitement. Here are the top seven mistakes we’ve seen so you can avoid them and confidently take advantage of the credit available to your business:

Estimating Your Potential Credit Amount

When you hear an estimate of $26,000 per qualifying employee, it’s tempting to simply multiply the number of employees you have by that figure and have your heart set on a large check. However, as with most things associated with the IRS, determining how much credit your business could be eligible for is much more nuanced than a simple multiplication problem. We highly suggest consulting a tenured team of tax specialists , like the one you’ll find at Stenson Tamaddon, to clear up any confusion. Our specialists can guide you through the qualification process while maximizing your credit with minimal risk.

Mentally Disqualifying Your Business Before Consulting a Tax Specialist

Since it was first introduced, the ERC has been modified several times to expand the program to more businesses. Consequentially, business owners have been left confused about how their business can qualify and many mentally disqualify themselves before talking to a tax specialist. Like, for example, did you know that your business could be eligible for the ERC even if it didn’t start until after the beginning of 2020? Don’t walk away from money that you can decide how to pour back into your business. Reach out to one of our tenured tax specialists today to see how we can help guide you through the qualification process.

Not Being Aware of Your Local Government’s Orders During the Pandemic

A key component of the ERC is determining the impact that the COVID-19 pandemic had on your business’s operations. In order to do so, you must have extensive knowledge of your local government’s ever-changing orders and mandates during that time. Thankfully Stenson Tamaddon has a solution to help alleviate that seemingly impossible task; we have an extensive library of local emergency orders readily accessible to our tax specialists so they can help guide you through the qualification process. You will never be alone in the filing process and can count on our team of specialists to use these resources to help you maximize your credit with minimal risk.

Failing to Properly Document

Compliance is a really big deal to us and that’s because there are really big consequences if the IRS catches you not following their standards. That’s why properly documenting your tax information is crucial. Stenson Tamaddon cares about our clients too much to put them at risk of being out of compliance which is why we offer readily accessible documentation in case the IRS decides to conduct a review of your filing.

Claiming Wages that Aren’t Qualified

As we mentioned above, the ERC program has been modified several times since it was first introduced. One notable change that expanded the credit to many more businesses was when the Taxpayer Certainty and Disaster Tax Relief Act of 2020 allowed businesses who took out a Paycheck Protection Program (PPP) loan to also qualify for the ERC, but, as many things with IRS do, it came with an asterisk. Wages used to obtain PPP loan forgiveness can not also be used to file for the ERC. While it can be intimidating to determine which wages are qualified, our proprietary technology was built to help you through the process.

Not Being Up to Date on the Latest ERC Updates

The ERC has gone through several changes since its introduction in the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. For example, did you know that you could be eligible for the ERC even if you also received Paycheck Protection Program (PPP) loan forgiveness? This wasn’t true until the Taxpayer Certainty and Disaster Relief Act made it so. The program was expanded to provide much-needed relief to even more businesses.

Even if you don’t think you could qualify for the program, reaching out to a team of knowledgeable tax specialists could prove otherwise. You can also check out our blogs to read more about the ERC and the most recent updates.

Working with a Filing Firm that Doesn’t Prioritize Compliance

Navigating relief programs can be confusing and daunting and will often leave you with more questions than answers. It is important to file with a knowledgeable firm to ensure that your business is in good hands. At Stenson Tamaddon, our specialists have extensive knowledge in finance and assisting businesses of all sizes. We are here to make the filing process as quick and painless as possible so that your day-to-day life isn’t interrupted. Stenson Tamaddon uses compliance-based technology to ensure that you have the peace of mind that your important documents are being handled correctly and with care. We know that time is money, so let us tackle the hard part. We’ll proactively guide you through the process. Reach out to our specialists today to get started and put money back in your wallet.

The post 7 Common Mistakes to Avoid Before Claiming the Employee Retention Tax Credit first appeared on Stentam .

The post 7 Common Mistakes to Avoid Before Claiming the Employee Retention Tax Credit appeared first on Stentam .

ERC101: Does the Employee Retention Credit Need to Be Paid Back?

Tue, 11 Oct 2022 21:21:00 GMT

The federal government was quick to provide essential relief to businesses that were impacted by the pandemic and the challenges it caused. The Employee Retention Credit, also known as the ERC, was introduced to reward businesses for keeping employees on the payroll during those unpredictable and tumultuous times. Many businesses were forced to navigate government shutdowns and restrictions as well as adapt to new ways of operation. Because the relief aid was introduced so quickly, many parts of the program have been amended leaving many business owners confused about how to qualify. Read below to understand the ERC basics and find out if you qualify!

What is the Employee Retention Credit?

The COVID-19 pandemic greatly impacted businesses across the country. In response to the economic uncertainty and turmoil, Congress introduced the ERC program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 to reward employers who kept employees on the payroll during the pandemic. In the simplest of terms, the ERC is a fully refundable credit filed against employment taxes. Employers could be eligible to receive up to $5,000 per employee available for the year 2020 and up to $7,000 per employee per eligible quarter in 2021.

Who Qualifies for the Tax Credit?

Determining if you qualify for ERC can be a bit stressful because several changes have been made to the program since it was first introduced. However, that doesn’t mean you should shy away from reaping the benefits that could be available to your business!

Your small business could be eligible if it was negatively impacted by these two major factors:

There are, of course, exceptions to these main eligibilities which is why leveraging a knowledgeable team of tax specialists, like Stenson Tamaddon, can help you navigate the complexities of the credit.

What is the Difference Between PPP Loans and Employee Retention Credit?

Paycheck Protection Program (PPP) loans gained much more traction than its sister program, the Employee Retention Credit (ERC) and if you’re reading this, you may have heard of the first but are curious about the latter. The PPP program offered a loan that provided money to businesses to offset costs and keep employees on the payroll. The Small Business Administration later offered forgiveness for the loan if a specific set of perimeters were met. The ERC, on the other hand, is a fully refundable tax credit paid via the IRS that businesses can claim on eligible wages that were paid to W-2 employees during the pandemic.

The biggest difference between the two is that the PPP is a loan that may need to be paid back if your business wasn’t eligible for forgiveness. The ERC never has to be paid back. In fact, it comes as a check delivered straight to your business’s address.

Can You Claim ERC if You’ve Gotten Your PPP Loans Forgiven?

Yes! When the credit was first introduced in the CARES Act, businesses that were participating in the PPP program could not apply for the ERC. However, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 has made it possible for businesses to take advantage of both the PPP and the ERC. Due to this recent update, there have been many misconceptions floating around, confusing business owners about their potential eligibility.

How Does Stenson Tamaddon Help You Maximize Your ERC?

Stenson Tamaddon prioritizes compliance with our proprietary technology that helps you maximize the amount of your business’s credit while minimizing risk. We get it – filing for ERC can be a daunting task. File with Stenson Tamaddon so you can rest easy knowing that your filing will be handled with care and compliance in mind. We can help you navigate the qualification process transparently and efficiently. We pride ourselves in helping small businesses reach their full potential. Reach out to one of our specialists today to get the money you deserve!

The post ERC101: Does the Employee Retention Credit Need to Be Paid Back? first appeared on Stentam .

The post ERC101: Does the Employee Retention Credit Need to Be Paid Back? appeared first on Stentam .

Why Compliance with the IRS Is So Important

Tue, 11 Oct 2022 21:04:00 GMT

Claiming the Employee Retention Credit (ERC) , Research & Development (R&D) Credit , and the Work Opportunity Tax Credit (WOTC) involves far more than just crunching numbers. Small and mid-sized business owners must navigate a complex web of qualification guidelines, including showing proof of qualified wages, partial suspension, employer size status, payroll records, qualifying expenses, and much more. These gray areas all contribute to the high potential for compliance issues and potential audits.

In this blog, we’re uncovering:

What is Compliance?

Compliance is when a taxpayer is adhering to recordkeeping and abiding by information reporting requirements. It means submitting required documentation within a stipulated period. This could include a chart of accounts, employee form W-2s, payroll registers, invoices, receipts, service contracts, or additional paperwork.

In short, compliance means wholly fulfilling all Internal Revenue Service obligations as specified by the law.

Why is Compliance So Important for the IRS?

Staying compliant with the IRS is critical for small and mid-sized business owners. By adhering to compliance regulations, taxpayers can ensure that their tax credit file requests and expected reports are in proper order, processes are abided by the IRS, and laws are adhered to.

Non-Compliance Can Lead to Audits and Additional Consequences

On the flip side, if business owners do not concern themselves with compliance, they could open themselves up to many consequences, including unfavorable results from an audit. The IRS defines an audit as “a review/examination of an organization’s or individual’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.”

If your business gets caught up in an audit, you’ll probably be wondering: How long does an audit take? How far back can the IRS audit a small business? What are my rights? While there’s no substitute for meeting with a qualified tax attorney, you can find some answers about audits on this IRS page .

Further consequences could also include:

Compliance is vital for us here at Stenson Tamaddon. Our team of tax credit specialists supports compliance-driven filings and offers advanced calculations. In addition, we help your business to understand its full potential to participate in various government stimulus programs and drive a maximum output of eligible credits.

More IRS Compliance Audits Are Expected as Early as 2026

With President Biden’s recent signing of the Inflationary Reduction Act (IRA, H.R. 5376, as passed by the Senate on August 7, 2022), more eyes than ever will be on small and mid-sized business tax compliance with the IRS.

Specifically, Part 3 of Title I, Subtitle A of the Inflation Reduction Act would assign to the IRS and related agencies $79.6 billion to remain available through FY2031. The bill intends for this new spending to be added to the IRS’s current annual appropriations. The overall idea behind this bill section is to help improve tax compliance, which could bring in an estimated $203 billion in increased revenue.

What This Means for Business Owners

Eighty-seven thousand new IRS agents are expected to be onboarded with the intent to locate and pursue auditing issues for commonplace taxpayers in the coming years; This means that there will surely be a jump in the number of IRS tax audits for small and mid-sized businesses. This massive change will likely magnify any compliance discrepancy that could cause concern for businesses running under the radar.

IRS Commissioner Chuck Rettig recently wrote a memo to his employees: “These changes will not be immediate… It’s a 10-year plan, and it will take time to put these provisions into place.” But for business owners, ensuring compliance is essential now more than ever. You’ll want to avoid getting caught up in the sea of audits projected as early as 2026 .

How Stenson Tamaddon Prioritizes IRS Compliance

There are many providers for corporations that help businesses file for tax credits, but few that utilize the power of dynamic technology to prioritize compliance. At Stenson Tammaddon, our approach to tax credit filing prioritizes compliance , making the customer service best in class. Our white-glove path to your success provides you with a 1:1 relationship with a tax credit specialist, the ability to have your documents filed for you, and the opportunity to engage with third-party legal and tax resources to continue to support your business needs.

Our method for filing tax credits – how we engage with clients, collect and review documents, and complete filings – both manually and leveraging proprietary and out-of-the-box technology, supports the requirements of a business to stay within the perimeter of proper, compliant standards and expectations.

How Stenson Tamaddon Puts Compliance First

At Stenson Tamaddon , our highest priority is ensuring that business owners’ experiences are pristine by executing that service within the boundaries of expected regulations and reducing risk. Talk with our tax specialists to understand how our commitment to compliance will drive a maximum output of eligible credits .

The post Why Compliance with the IRS Is So Important first appeared on Stentam .

The post Why Compliance with the IRS Is So Important appeared first on Stentam .

How COVID-19 Social Distancing Requirements Impacted Business Operations

Tue, 11 Oct 2022 20:23:00 GMT

So many things changed when COVID-19 cases began to rise in March 2020. Kids started virtual school. Face masks became as important for running errands as your wallet and keys. And businesses that remained open had to implement several public health measures — including the phrase we saw everywhere: “Please remain six feet apart and practice social distancing.”

While the practice of social distancing was aimed at slowing the spread of the virus and protecting everyone’s health, it also slowed sales and earnings for most businesses open to the public.

Due to government orders, restaurants often had to suspend their sit-down dining operations and could only offer to-go meals for carry-out customers. When they were permitted to re-open their dining rooms, they often had to skip every other table when seating diners to maintain the appropriate amount of space.

Spas and salons had to drastically limit appointments and could no longer accept walk-in customers in order to keep everyone safely distanced from one another. Gyms also had to reconfigure spaces and equipment, as well as limit capacity. Many businesses where people usually gathered — to socialize, exercise, learn, or relax — were severely impacted by social distancing requirements.

My Business Implemented Social Distancing Measures — Am I Eligible for the ERC?

It depends.

If your business was impacted by a government order (federal, state, or local) that required you to limit the amount of people in your building and it affected more than a nominal portion of your business operations, then you are likely eligible.

Even if all categories of your business continued operating, requirements like spacing tables at least six feet apart would naturally impact the number of customers you could serve. This space constraint effectively means your usual business operations continued to be partially suspended.

Because many companies were severely impacted by the government shutdown and subsequent orders like social distancing, Congress passed the CARES Act in March 2020. One key provision of this act was the Employee Retention Credit (known as ERC) — a tax measure intended to provide economic relief so businesses could stay open and continue to pay their employees.

Orders like social distancing required businesses to make significant changes to their physical spaces and/or business operations before they could reopen to the public. If these modifications had a qualifying impact on your business, you might be eligible for this credit — up to $26,000 per W-2 employee . At ERC Specialists, we are experts at helping you figure that out.

If I Think I’m Eligible, How Do I Apply for the ERC?

The ERC has distributed millions of dollars to qualified businesses. But determining eligibility and knowing how to proceed can be confusing. Many of our past clients, across all 50 states, were actually referred to us by their own CPAs and tax professionals. These experts recognize that this is a new area that requires specialization. Which is where we come in.

We simplify a complex process by helping our clients take a few steps, including:

That’s it.

If our analysis determines that your business isn’t eligible, it costs you nothing. And you’ll have peace of mind knowing you didn’t leave money on the table.

If you are eligible, we will help you get a credit of up to $26,000 per employee on your payroll. Our service charge is calculated with your free analysis and is based on a percentage of the credit recovered. You’ll end up with thousands of dollars to help you continue running your business — many of our clients have received six-figure or seven-figure credits.

We look forward to helping you determine if you’re eligible too.

The post How COVID-19 Social Distancing Requirements Impacted Business Operations appeared first on ERC Specialists .

Substantiating the Employee Retention Credit

Tue, 11 Oct 2022 20:19:00 GMT

For all IRS filings, it is up to the business owner to keep records that back up the numbers on the returns. Just like you’d keep receipts, mileage records, and bank statements for your regular business taxes, it’s vital to keep records on hand for your ERC filing. The IRS has operations in place to test its processes to ensure that tax filings across the country have been executed properly.

ERC Specialists Provides:

What records does ERC Specialists provide upon request to substantiate the ERC returns filed?:

We will provide you with copies of the questionnaire you completed as to how your business qualified. As well as any documents you provided to ERC Specialists relating to the returns, and our calculations of the credit.

Accuracy on this documentation is vital, and will support qualification for the credit. Remember, all the documentation we submit to the IRS comes from the company itself. This is why it is crucial for the company to be as honest and thorough as possible in the questionnaire and on their requested documents.

Client Provides:

What records should an eligible employer maintain to substantiate eligibility for the Employee Retention Credit?

An eligible employer will adequately substantiate eligibility for the employee retention credit if the employer creates and maintains records that include the following information:

Documentation to show how the employer determined it was an eligible employer that paid qualified wages, including:

How long should an eligible employer maintain records to substantiate eligibility for the Employee Retention Credit?

An eligible employer should keep all records of employment taxes for at least 5 years after the date the tax becomes due or is paid, whichever comes later. These should be available for IRS review.

The post Substantiating the Employee Retention Credit appeared first on ERC Specialists .

6 Tips for Claiming the Employee Retention Credit

Tue, 11 Oct 2022 12:32:00 GMT

Have you applied for the Employee Retention Credit (ERC)? If not, you may be missing out on a completely refundable tax credit to help your business bounce back from the pandemic. The ERC was created to reward businesses that kept employees on the payroll during the pandemic and has been changed and amended several times, making the credit easier than ever to qualify for. Filing for the ERC can be daunting so follow these six tips to minimize your frustration and maximize your credit!

Don’t Estimate Your Potential Credit Amount

While it may be tempting to sit down and calculate how much you think your business is due through ERC, we don’t recommend it. Not only could it lead to heartbreak once you go through the official qualification process, but it could also tempt you to file for more than you are actually eligible for, which could end in an audit from the IRS. Don’t put the cart before the horse – leverage a tenured team of tax specialists that can help you navigate the qualification process and make sure that you are claiming the amount you truly deserve.

Be Up to Date on Recent Updates to the ERC Program

The ERC has gone through several changes since its introduction in the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. For example, did you know that you could be eligible for the ERC even if you also received Paycheck Protection Program (PPP) loan forgiveness? This wasn’t true until the Taxpayer Certainty and Disaster Relief Act of 2020 (Relief Act) made it so. The program was also expanded to provide much-needed relief to even more businesses.

Don’t Try to Double Dip

Thanks to the Relief Act, which was mentioned above, businesses that received PPP loan forgiveness can now also be eligible to receive ERC, but as with most things from the IRS, it comes with a caveat. Wages used to receive PPP loan forgiveness can not be claimed as qualified wages for the ERC. Doing so puts your filing out of compliance which could open your business up to the much-dreaded IRS audit, additional legal and tax specialist costs, and a mandatory return of credit funds. Save yourself the headache and choose to file with a solutions provider that prioritizes compliance throughout the entire process.

Fill Out the Proper Forms

Even though the ERC program ended in September of 2021, qualifying businesses have up to three years to retroactively claim the tax credit! To do so, businesses need to file an amended payroll tax return using Form 941-X.

Document, Document, Document

Compliance is the song that never ends at Stenson Tamaddon because we believe it is truly critical to protecting your business against unfavorable findings from an IRS investigation. Keeping adequate records and documentation from your tax filings is an important safeguard.

File with a Firm that Prioritizes Compliance

Navigating relief programs can be confusing and daunting and will often leave you with more questions than answers. It is important to file with a knowledgeable firm to ensure that your business is in good hands. At Stenson Tamaddon, our specialists have extensive knowledge in finance and assisting businesses of all sizes. We are here to make the filing process as quick and painless as possible so that your day-to-day life isn’t interrupted. Stenson Tamaddon uses compliance-based technology to ensure that you have the peace of mind that your important documents are being handled correctly and with care. We know that time is money, so let us tackle the hard part. We’ll proactively guide you through the process. Reach out to our team of specialists today to get started and put money back in your wallet.

The post 6 Tips for Claiming the Employee Retention Credit first appeared on Stentam .

The post 6 Tips for Claiming the Employee Retention Credit appeared first on Stentam .

Tax Relief Act Extends Covid Tax Credit for Employers Who Kept Workers on Payroll

Mon, 10 Oct 2022 17:23:00 GMT

The COVID-19 pandemic created numerous challenges for businesses, leaving many employers tired and burned out. Luckily, the federal government has responded to the pleas of business owners and come up with a solution to provide businesses with much-needed aid to stay afloat during these unprecedented times. The Employee Retention Credit (ERC) was introduced by the Coronavirus Aid, Relief, and Economic Security Act (CARES) to reward employers for keeping their employees on the payroll.

What is the Taxpayer Certainty and Disaster Tax Relief Act of 2020?

The Taxpayer Certainty and Disaster Tax Relief Act of 2020, also known as the Relief Act, was signed into law in late December 2020. Relief Act extended the ERC through June 30, 2021, allowing more businesses than ever to reap the benefits. The expansion of ERC gives businesses the ability to apply retroactively as well as ease up several of the requirements.

Everything You Need to Know About the Relief Act:

Due to the new changes, eligible businesses can now claim a completely refundable tax credit against the employer share. Eligible employers can claim up to 70% of the wages paid to qualified employees after December 31, 2020, extending through June 30, 2021. The highest ERC amount is $7,000 per worker per calendar quarter.

The Relief Act made it possible for several businesses that did not previously qualify due to restrictions against filing for both Paycheck Protection Program loans and ERC to qualify for the credit. Previously, employers were allowed to file for one or the other. The Relief Act made it so employers could use qualified wages not applied to obtain PPP loan forgiveness to file for the ERC. As of right now, businesses can apply retroactively all the way back to March 12, 2020.

ERC is often overlooked by employers because the program can be very complex and confusing. Your business might be eligible if you meet at least one of two requirements:

In addition, the Relief Act made several changes employers should be aware of:

How Much Can My Business Now File for Thanks to the Relief Act?

Employers can now claim up to $26,000 per W2 employee thanks to the Relief Act’s expansion of the program which could make a significant impact on your business’s bottom line. Let me show you the math for how we came up with that number:

Unlike the Paycheck Protection Program which dictated how you should spend the funds in order to apply for forgiveness, the ERC is a refundable tax credit, which means the money can be used as your business sees fit. The possibilities are endless and the Relief Act’s expansion of the program made it more accessible and valuable to businesses than ever before!

How Stenson Tamaddon Can Help You Maximize Your Tax Credits:

Navigating tax credit programs can be complicated and often brings up more questions than answers. At Stenson Tamaddon, our specialists have extensive knowledge of finance and work to help businesses of all sizes. We are here to make the filing process as easy as possible without disrupting your day to day-to-day life. Stenson Tamaddon uses proprietary technology which gives you the peace of mind of knowing that your important documents will be filed within a timely manner and with compliance in mind. We know your time is important, so let us take care of the complicated stuff and proactively guide you through the filing process in a transparent way. Reach out to one of our specialists today to get started and get the break you finally deserve.

The post Tax Relief Act Extends Covid Tax Credit for Employers Who Kept Workers on Payroll first appeared on Stentam .

The post Tax Relief Act Extends Covid Tax Credit for Employers Who Kept Workers on Payroll appeared first on Stentam .

Nonprofit Owner’s Guide to the Employee Retention Credit

Mon, 10 Oct 2022 13:30:00 GMT

During the height of the COVID-19 pandemic, hundreds of thousands of for-profit and not-for-profit businesses were scrambling with finding innovative ways to stay open or having to shut their doors entirely with government orders. It was during this time that the Employee Retention Credit (ERC) was created in 2020 by the Coronavirus Aid, Relief and Economic Security Act (CARES). The ERC is a fully refundable tax credit filed against W-2 employment taxes. For many, it has helped keep their nonprofit business afloat during uncertain times.

But what many may not have realized is that the Employee Retention Credit wasn’t just intended for a traditional for-profit business. It was also created to help support nonprofit small businesses and recovery start-up businesses.

Unfortunately, many nonprofit small businesses that qualified for the Employee Retention Credit didn’t claim them against their payroll taxes in 2020 or 2021. But the good news is that funds are still available. We’re listing out the top five reasons why your nonprofit should apply for the ERC today and who you should turn to for getting started.

Most Nonprofit Businesses Could Qualify for ERC

If you’re in charge of a nonprofit, you’re probably wondering if the Employee Retention Credit is attainable. There’s good news — Not-for-profit, for-profit, and recovery startup businesses can all apply for an ERC. Tax-exempt organizations are eligible for the Employee Retention Credit because they are considered to be involved in a trade or business regarding the entirety of their operations.

Tax-exempt Nonprofit Small Businesses That Could Apply Include:

For a Nonprofit to Qualify for ERC, It Must Meet One of the Following Qualifications:

If you can agree with any of the qualifications above and you haven’t applied yet, you could be missing out on valuable funds. And for the first bullet above especially, there’s a good chance that your nonprofit business falls into this category. Did you find yourself limiting payroll hours, hiring on additional employees for sanitation needs, or reducing services? Did you have to temporarily close the doors to your physical location or your entire nonprofit business?

If you’re not sure if your nonprofit business falls into this category, connect with one of our tax specialists and we can walk you though eligibility requirements. By seeking an ERC, you can help further your cause and reach more people in need in the coming months.

Your Nonprofit Could Receive Up to $26,000 Per Employee

In the United States, the nonprofit sector employs 24 million Americans ; That’s about 14 percent of the workforce. With an average of about half of nonprofit businesses employing at least one full-time W-2 employee, the odds are pretty good that you could already be eligible for an Employee Retention Credit. How so? In order to qualify for the Employee Retention Credit, you’ll need at least one full-time W-2 employee.

In 2020 and 2021, If your nonprofit employed at least one full-time employee, you may very well be able to take advantage of the ERC credit. But you may be wondering, “How much exactly are we talking here?” How does up to $26,000 per employee sound? For nonprofits especially, every penny counts. Every supply and resource is stretched to its limit so that the mission can continue to impact more individuals in the community. But if you had a check sent to your business for $26k, $52k, or even more, think about how much burden that could take off your shoulders.

If you’re ready to take that next step, get in touch with our team of tax specialists. We’ll help guide you along every step while handling all the heavy lifting for you. We pride ourselves in our complete tax credit filing solutions – having everyone and everything you need to provide you with the best experience, highest return, and compliance-focused process. After all, we know that as a nonprofit, you’re never not juggling multiple plates.

You Can Retroactively Apply for the ERC

Are you concerned because you missed the window? After all, you flipped the calendar on 2021 long ago. But did you know that you can retroactively still claim the Employee Retention Credit for up to three years?

If your business has experienced a significant impact due to COVID-19 between March 12, 2020, and September 30, 2021 (or December 31, 2022, for employers who qualify as a nonprofit recovery start-up business ), you can go back and claim ERC for paid qualified wages for past calendar years with Form 941 or Form 941-X .

And while you have three years from your original filing deadline to claim the credit retroactively, you don’t want to wait any longer. Get started filing for an ERC today and you’ll be well on your way to putting funds you deserve back into your business.

It’s Easier Than You Think

Stenson Tamaddon allows nonprofit business owners like you to unlock the full potential of economic relief programs and specialized tax incentives, including the Employee Retention Credit .

We believe in a professional, accelerated approach to tax solutions for businesses and stand on our hassle-free promise to customers that their ERC filing will always be compliance-driven and accessible. Using proprietary technology, our U.S.-based ERC team provides experience and services that are second to none while focusing on fully maximizing your return. With offices from New York, New York, to Phoenix, Arizona, we exist to deliver optimal results for your ERC filing with minimal disruption to your business.

Talk with one of our tax credit specialists today to learn more about how you can get the money you deserve!

The post Nonprofit Owner’s Guide to the Employee Retention Credit first appeared on Stentam .

The post Nonprofit Owner’s Guide to the Employee Retention Credit appeared first on Stentam .

R&D Credit 101: Defining Business Component

Thu, 06 Oct 2022 15:06:00 GMT

Are you a small business owner looking to take advantage of the Research & Development (or R&D) tax credit? If so, you’ve probably heard the term “business components” and are knee-deep in researching this “four-part qualifications test” you’ve been reading about. We’re delving into all that and more in this blog post. So sit back, get your scrolling thumb ready, and lean in to learn all your pressing questions about the R&C tax credit in this easy-to-skim six-minute article.

As highlighted in this recent blog , the Research & Development (or R&D) tax is a United States government-sponsored tax initiative. It results in a dollar-for-dollar reduction in a company’s tax liabilities and is one of the best things American businesses can do to reduce their liability tax. The research and experimentation tax credit was essentially designed as an incentive to make research activities more affordable for businesses, strengthening American innovation.

What is a Business Component?

A business component is any of the following that is for sale, lease, license, or used in trade:

Product

A product is what you make or sell for profit. So, for example, if you own a small manufacturing business that produces pre-packaged snack foods, any new foods you test and make would count as a business component. Of note: Products don’t necessarily need to be tangible. For example, if you’re an architect, your completed building design is your “product” (or business component), even if you haven’t built it.

Invention

The foundation of innovation is invention. Inventions come from research which could include carefully focused sustained inquiry and much trial and error. For example, in 2019, one company created the world’s first talking hearing aid. Suppose your small business or manufacturing company is on the verge of creating a new invention or already has a pile of recently completed creations on your shelves. In that case, you could qualify for Research & Development Tax Credits with your invention counting as a business component. As Albert Einstein put it , “Necessity is the mother of all invention.”

Process

The process is how you make your product, including the attached expenses. For instance, if you invested in new equipment for your small business, they would be counted as your qualified process improvements or business component. Although the equipment cost is most often capitalized (and not counted toward the R&D tax credit), the cost of the employees figuring it out, any materials needed for optimizing, and any third-party consultants you worked with would count as qualified research expenses or QREs.

Technique

Technique refers to the “tools” that your small business uses to follow through with your processes, from concept to completion. In manufacturing, we’re talking about the folks actively developing the molds, tools, models, and dies. The technique can also to processes with end-goals to go green, drive quality initiatives, and reduce waste.

Software

With technology advancing so rapidly, the software has to adjust accordingly. Is your small business writing custom code? If your coding project hits the mark for one of these four scenarios, you could qualify for the Research & Development Tax Credit.

Formula

Often, business owners tend to group all research into one general category; they don’t tend to identify specific business components separately. But for a taxpayer to claim the Research & Development tax credit, they’ll need to be able to tie individual research to a specific business component. So it’s essential to keep accurate records for claiming an R&D credit.

But what precisely should you keep track of? Read on in our next section to learn how to claim the Research & Development tax credit and what specifics you’ll want to pay close attention to.

What is the Four-Part Qualification Test?

To make things easier for small business owners, the Internal Revenue Service, or IRS, has outlined a four-part test to determine eligibility. If you can pass each component of this test and aren’t already in the middle of filing for R&D tax credits, you could be missing out on an easy way to reduce your tax liabilities.

Four-part Qualification Test:

Does My Business Component Pass the Four-Part R&D Qualification Test?

So you have a business component that matches, you’ve checked the Four-Part Qualifications and started gathering your qualifying documents. What’s next? Now is the perfect time to reach out to a team of tax specialists . We guarantee ‌that your experience will be professional, timely, and compliance-driven, saving you time, money, and resources.

Still not sure? Let’s run through a quick example of how a few companies could pass the Four-Part R&D Qualification Test and qualify for the credit:

Let’s say you’re in charge of a manufacturing firm developing medical devices. You want to increase productivity from 12 percent to 17 percent and are looking for ways to make this goal happen.

The following activities could qualify you for the R&D credit:

Similarly, suppose you have a product run by software. In that case, the costs of developing new software to make that product more efficient or reliable may qualify you for the Research & Development tax credit. Or, if you’re an engineering firm, the costs attached to researching and establishing green technology could qualify.

Many projects could qualify you; Save up to $250,000 for your small business from research and development. Maximize your savings and let Stenson Tamaddon ensure that your R&D Tax Credit filing is accurate, compliance-focused, and on time – allowing you to get back to what you love doing.

How Do You Claim the R&D Tax Credit?

Is your business already performing one or more of the business components above? If so, you may be ready to start claiming the Research & Development tax credit.

First up on your to-do list? Check above for the four-part qualification test. Here is where you’ll find the specific questions you’ll need to address to decide if you’re eligible to claim the credit.

If you pass the four-part qualification test, you’re ready to gather your documents. These could include:

Specifically, you’ll want to retain all records that correlate with each specific R&D project, ensuring that all calculations of the credit eligibility are in order.

Next up? Check below for the best way to file for the Research & Development tax credit.

Who Can Help My Business File for the R&D Credit?

Stenson Tamaddon works with business owners to leverage the benefits of government stimulus programs like the R&D Tax Credit.

We believe in a professional, compliant approach to tax credit services and provide a hassle-free promise to customers that their R&D Tax Credit filing will always be accurate, compliance-driven, and secure. Our team uses proprietary technology to deliver services that are second to none while fully maximizing your filings. With offices from New York to Arizona, we exist to provide optimal results for your R&D Tax Credit filing with minimal disruption to your business.

Don’t wait to file for the Research and Development Tax Credit. In as few as these three steps, we’ll help you retrieve the money you deserve:

Get the money you deserve. We’re ready to help you identify what federal stimulus funding may be available for your business. So get started with an R&D tax credit specialist today .

The post R&D Credit 101: Defining Business Component first appeared on Stentam .

The post R&D Credit 101: Defining Business Component appeared first on Stentam .

Your Business Could Still be Eligible for the ERC, Even if You Didn’t See a Dip in Revenue During the Pandemic

Tue, 04 Oct 2022 19:00:00 GMT

Are you wondering if you’re too late to claim the Employee Retention Credit or ERC? Small business owners like you, too, might be loading their internet search with queries like, “Can I be eligible for Employee Retention Credit if I didn’t see a dip in revenue?” “How can I know if my business qualifies?” “Can I claim the ERC if I started my business during COVID-19?” So today, we’re uncovering all things ERC in one easy-to-skim five-minute article. After all, we know your time is your most significant resource. And you’ve got a lot of business plates to juggle.

So, what exactly is the Employee Retention Tax Credit (ERC)? The ERC is a fully refundable tax credit set up by the government due to the COVID-19 pandemic. It’s the government’s way of giving back to businesses and essentially rewarding them for keeping employees on payroll between 2020 and 2021. And with up to $26,000 per employee available, it can increase your chances of success. How so? It can offset or eliminate payroll taxes and is currently one of the most significant refunds businesses can get.

How Do Businesses Know if They’re Eligible for the Employee Retention Credit?

To determine if you can take advantage of ERC stimulus funds for your small business, check the qualifying quarters and possible eligibilities below.

General Requirements for Each of the Date Ranges Below:

Mar. 13, 2020, through Dec. 31, 2020: Up to $5,000 can be credited per qualifying employee if your business:

If you were self-employed but had at least one employee, you may qualify for Employee Retention Credit wages paid to those employees, but the owner’s wages can not be included in that number.

Jan. 1, 2021, through Sept. 30, 2021: Up to $21,000 can be credited per employee if your business:

*If your business began after February 15, 2020, you could use 2020 for this comparison instead.

Oct. 1, 2021, through Dec. 31, 2021: Up to a $50,000 credit per calendar quarter if, and only if, your business is considered a recovery startup business.

Common Eligibilities for the ERC

Did your business face hardships during 2020 or 2021? If so, you may qualify:

Additionally, if your business belongs to one of the following industries, you could qualify for credits:

Both essential and non-essential businesses could be eligible for ERC because nearly all businesses were forced to adapt to safety restrictions and government-mandated shutdowns due to the pandemic.

Could My Business Still Be Eligible for the Erc if I Opened It After February 2020?

In short, yes! If you started your small business after February 2020, you could claim Employee Retention Credit as a “ startup recovery business .”

What is a Recovery Startup Business?

Congress realized that the ERC program wasn’t reaching as many businesses as they had originally intended so they expanded the program through the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

In short, a Recovery Startup Business is one where:

If a small business meets the above requirements, it could also claim ERC for the third or fourth calendar quarter of 2020.

How Much Can My Business Claim With ERCs?

You could get up to $26k per employee with Employee Retention Credits. So even if you’re not positive that your company could qualify, if you can relate with any of the above eligibilities, there’s a good chance you do. Plus, you don’t want to pass up extra funding for your business to thrive after the previous year’s hardships.

As an aside, did you already apply for funds from the Paycheck Protection Program (PPP)? The Relief Act also opened the credit up to businesses who originally had to pick between the PPP and ERC . Connect with our team to ensure you’re not leaving money on the table and maximize your ROI!

Who Can I Trust to Help My Business Apply for the ERC?

Stenson Tamaddon exists to deliver optimal yield with minimal disruption to customer business operations. Leveraging technology-enabled solutions that deliver real results, we help business owners unlock the full potential of economic relief programs and specialized tax incentives.

Unlike other tax solution companies, we work with you to help you qualify, apply for and leverage existing stimulus programs that support your business’s bottom line—no need to work with external preparers or other companies.

How Do I Claim My Tax Credit?

If the pandemic has impacted your small business, don’t miss your chance to get the relief you deserve!

At Stenson Tamaddon , we can determine if you meet the requirements to qualify for ERC, help you fill out a Form 941X based on your employer’s quarterly federal tax return, and even file for an advance payment on your credit. Our job is to maximize the credit you receive and minimize any risks that come with it.

It’s no secret that there are a lot of logistics that go into filing for your business’ Employee Retention Credit. That’s where we come in. We handle finance regularly, so leverage our experience, and we’ll ensure your business receives the maximum credit. We can help uncover all funding opportunities your business qualifies for, get a quote for your claim, and begin filing for your ERC credit.

Talk with one of our tax credit specialists today to learn more about how you can get the money you deserve!

The post Your Business Could Still be Eligible for the ERC, Even if You Didn’t See a Dip in Revenue During the Pandemic first appeared on Stentam .

The post Your Business Could Still be Eligible for the ERC, Even if You Didn’t See a Dip in Revenue During the Pandemic appeared first on Stentam .

Omega Accounting Tops the List of Fastest-Growing Companies in 2022

Fri, 30 Sep 2022 23:04:00 GMT

Omega Accounting Solutions was recently recognized as the #1 fastest-growing mid-sized company in Orange County by the OC Business Journal . The OCBJ based its rankings on two-year revenue growth from 2020 to 2022, with Omega Accounting Solutions achieving an increase of over 3,000% during that period. It’s not the accounting firm’s first time being named among the best companies in Orange County. Omega was also recognized by the OCBJ as the #3 fastest-growing small private company in Orange County for 2021 . Their rapid growth over the past year placed them in the mid-size company category for 2022.

To support the expansion, the company relocated its headquarters to Irvine’s FivePoint Gateway office campus, moving into a space of more than 21,000 square feet, more than triple the size of its prior footprint.

Omega Fuels New Growth with Employee Retention Tax Credits

Founder and President of Omega Accounting Solutions, Jay Woods, credits their rapid rise to the company’s strategic integration of tax credits for small business clients.

“We saw a great opportunity to expand our services by helping small, underserved businesses utilize new tax credits created in response to the pandemic, such as the ERTC. In doing so, we’ve helped many companies recover from shutdown mandates and supply chain disruptions while growing our business along the way.”

The Employee Retention Tax Credit (ERTC) is a refundable tax credit rewarding businesses that retained employees during the COVID-19 pandemic. Small to medium-size companies can receive up to $26,000 per employee, retroactive to 2020 and 2021. By educating clients Omega enables them to take advantage of the ERTC and handles the application process from start to finish. As a result, Omega recorded exponential growth at unprecedented speed.

LEARN MORE ABOUT ERTC

Omega Looks to Sustain Rapid Growth in 2023

While many financial indicators signal an economic downturn, many top companies in Orange County are still achieving accelerated growth. Omega Accounting Solutions is proud to be a leader in this category and plans to continue expanding its workforce with increased hiring efforts in 2023 and beyond.

The post Omega Accounting Tops the List of Fastest-Growing Companies in 2022 appeared first on Omega Accounting Solutions .

Research & Development Tax Credit: The Basics for Employers

Tue, 27 Sep 2022 16:29:00 GMT

There are a lot of questions surrounding the Research & Development (R&D) tax credit. What is it? How did R&D credits get started? Which research and development projects qualify? If I have employees who handle specific related tasks, could I qualify? How do I get started? Is there a way I can be sure I’m filing for R&D credits correctly? But for most small business owners, the time it takes to research each of these questions can be daunting. So today, we’re tackling each of these questions and getting you the answers you need.

What is the R&D Tax Credit?

The R&D tax credit, also known as Research and Experimentation (R&E) tax credit , is a United States government-sponsored tax initiative. It results in a dollar-for-dollar reduction in a company’s tax liabilities and is one of the best things American businesses can do to reduce their liability tax.

The research and experimentation tax credit was essentially designed as an incentive to make research activities more affordable for businesses, strengthening American innovation.

The History Behind the R&D Tax Credit

Initially, the R&D tax credit was created in 1981 by U.S. Representative Jack Kemp and U.S. Senator William Roth. It has since expired eight times and been extended 15 times. It was made during a perceived economic slowdown and job outsourcing to protect Americans, encourage investment in development, and increase research activities and basic research payments.

When the credit first rolled out, to qualify, a company had to design or produce a novel product or technique according to what was referred to as the “Discovery Rule.” Unfortunately, this meant that only a few cutting-edge businesses were eligible.

In 2003, regulations were added to eliminate the “Discovery Rule” and expand which activities could qualify for small businesses to claim the R&D credit. Instead of being “new to the world,” activities could now be “new to the taxpayer,” increasing the number of small businesses that could qualify.

Three years later, the Alternative Simplified Credit (ASC) was instituted and provided added flexibility with updated baseline calculations for the credit. In 2013, provisions were added to allow ASC for amended returns for years that a taxpayer did not previously claim the credit.

Thirty-four years after the R&D credit was created, the Protecting Americans from Tax Hikes Act (PATH Act) was passed. This milestone document officially made the Research & Development tax credit a permanent addition to the U.S. tax code. Also, in 2015, new regulations were added to allow businesses grossing less than $50 million in tax receipts to claim the credit.

During the latest batch of updates, in 2018, Alternative Minimum Tax (AMT) restrictions were loosened to allow S-corps and C-corps to apply for the R&D credit. Today, Research & Development tax credits remain one of the most remunerative tax incentives for small businesses.

Who is Eligible for the R&D Tax Credit?

Many businesses are not aware if they actually meet eligibility qualifications. Some believe there are special rules needed to qualify. While the correct documentation is required, in reality, over 60 industries can qualify for R&D credit in over 30 states to offset tax liabilities. Some businesses’ daily operations can be eligible for them, allowing them to receive basic research credit if it puts them over a certain base amount. Even startups can use this to their advantage.

If your company spends money on improving or developing processes that apply to a field of science, you may be eligible to claim the Research & Development tax credit. This can be as simple as dedicating money to refining your company’s manufacturing process, hiring someone to increase efficiency within your company, etc.

Your small business could qualify for R&D tax credits if you manage the following types of employees:

Additionally, if your small business is handling these types of projects, you too may qualify:

But what about sole proprietor small businesses? A recent Statista Research Department report shows over 27.1 million non-employers (sole proprietors). And what’s still, the number of non-employers has been demonstrated in this research report to be growing more rapidly than employer firms. While many entrepreneurs launch their businesses as sole proprietorships, they may think they’re not eligible to apply for an R&D credit. But non-employers can still qualify to take the credit at the federal level. The limits are the same no matter the number of employees, but as a qualified startup, you can take the credit to offset payroll taxes instead of income taxes.

Are you still unsure if you qualify for the R&D credit? The IRS has outlined a four-part test to determine eligibility for your small business. If you can checkmark the below tasks and aren’t taking advantage, you could miss out on thousands to reduce your tax liabilities.

Can You Pass the Four-part Qualification Test for R&D Credits?

The IRS has outlined a four-part test to determine eligibility for your small business. If you pass these tests and aren’t taking advantage, you could be missing out on thousands to reduce your tax liabilities.

According to the IRS, creating or innovative new products or processes are known as qualified research activities. The amounts incurred or paid during the research activities, such as employee wages and supply costs, are known as qualified research expenses.

Incorporating basic research activities in your small business strengthens American innovation and makes them more affordable. What’s more, you’ll be maximizing available tax credits while prioritizing compliance.

How to Take Advantage of the R&D Tax Credit

You’re ready to lace up your track shoes to hit the ground running to take advantage of the R&D credit, but then this thought occurs. “How on earth do I get started?” We hear you. This section outlines the first steps you’ll need to begin filing for a Research & Development tax credit. So get ready: You’re about to take steps toward attaining a dollar-for-dollar reduction in your company’s tax liabilities.

Step 1: Find out if you could be eligible. Did you pass the IRS four-part test, or could you relate to any of the instances in that same section above? If so, there’s a great chance you could already be qualified. So move right on to step 2! Still not sure? Connect with one of our tax specialists , and they’ll be able to work with you to see if you may be eligible.

Step 2: Gather necessary documentation. The IRS requires ample documentation to prove the qualified activities were performed and support the attached expenses claimed for the Research & Development credit.

Examples of these R&D documents could include:

Namely, you’ll want to be sure to retain all records that relate to and track the research and development projects, especially the calculations of the credit eligibility.

Step 3: Fill out a quick 7-question form to get started filing. When filing for a Research & Development credit, it’s normal to have questions, especially when tax hikes are in full swing. But if you’re ready to start the process right the first time , we’re here to help. At Stenson Tamaddon, we’re a compliance-driven, technology-enabled, and customer-first company. We believe in a professional, compliant approach to tax credit services and provide a hassle-free promise to customers that their R&D Tax Credit filing will always be accurate, compliant-focused, and secure.

Step 4: Use our proprietary technology to securely upload all your R&D documents and information to our tax credit team. Our unique tax credit-focused technology supports your success by maximizing ROI, prioritizing compliance, and offering audit-ready solutions. With offices from New York to Arizona, we exist to deliver optimal results for your R&D Tax Credit filing with minimal disruption to your business.

Step 5: We’ll take your information, prepare it and submit it for filing with the IRS with our 100% secure and compliance-focused technology. Our tax specialists guarantee ‌that your experience will be professional, timely, and compliance-driven, saving you time, money, and resources. The best part? We’ll ensure that while you’re filling for the R&D Tax Credit, you’re not missing out on other tax credit filings you may be eligible for.

Partnering with Stenson Tamaddon is the best thing you can do when filing for an R&D tax credit to ensure all is done to keep you in compliance and maximize your overall return – and that’s why we’re here! We’ll look at your expenditures, base amount, tax rate, contract research, and gross receipts in all open tax years to determine how much R&D credit you qualify for so your small business can receive its basic research credit.

Apply to file for your Research & Development tax credit today. Set your business up for success with Stenson Tamaddon.

The post Research & Development Tax Credit: The Basics for Employers first appeared on Stentam .

The post Research & Development Tax Credit: The Basics for Employers appeared first on Stentam .

5 reasons why we are your BEST choice to maximize your ERC credits!

Sun, 25 Sep 2022 14:26:00 GMT

Are you looking for the best choice for your ERC filing? We’d like to invite you to consider ERC Provider. Our company has helped over 2,000 companies receive their maximum ERC credits. Our average claim amount is over $500,000, and some have received over $6 million in credits.

We are proud of our track record of serving small businesses with excellence. Here are the top 5 reasons you should choose ERC Provider for your ERC claim:

1. Timely filings. We are usually able to complete ERC filings within two weeks from the initial call to filing with the IRS. Compare this with an 8-month turnaround time for many of our competitors.

2. Fair and transparent pricing . We charge 10% when you pay up-front or 15% if you pay when you receive the credits.

3. Free, no obligation analysis. Give us a call, submit some simple paperwork, and we’ll analyze your claim at no charge with no obligation. It’s worth getting a second opinion from us before filing to make sure you’re getting the maximum credits you are entitled to.

4. Personal service. We have a team of 25 dedicated ERC specialists who will walk you through the ERC rules and help you determine your qualification. We are available for help all throughout the process.

5. Proven track record. In the past year, along with our partners, we have claimed over $6 billion in ERC credits. We know these credits inside and out and we can get it done for you. As a family business, we operate with integrity and dedication, focused on helping businesses prosper and grow. There’s no way to know what credit is yours until we explore this together. Let us help you claim your credit.

How Does the Employee Retention Credit Apply to Your Recovery Startup Business?

Tue, 20 Sep 2022 16:02:00 GMT

The COVID-19 pandemic changed the way the world operated and presented several new challenges for business owners across the globe. From government mandates to profit loss, businesses have had to figure out how to navigate the new economy and stay afloat. Thankfully for businesses in the US, there are several economic relief programs that were created to help them do so.

Businesses that were created after February 15, 2020, however, faced a unique hardship because they started in the middle of the unprecedented pandemic. These businesses, also known as “Recovery Startup Businesses,” were not eligible for the widely discussed Paycheck Protection Program (PPP) loans, but they could still be eligible for up to $100,000 in credits through the Employee Retention Credit (ERC), thanks to a recent change in the federal law.

What Is a Recovery Startup Business?

A Recovery Startup Business is a business that started performing work and receiving income on February 15, 2020, or later. This means if you set up your LLC in December of 2019 but did not start operation until March 2020, you could be eligible. The Recovery Startup Business serves as its own category and does not focus on the traditional requirements of ERC such as full/partial suspensions and a decline in gross receipts. This is aimed specifically at business owners and entrepreneurs who took a risk to create something new for the economy during a difficult time.

Key Components of a Recovery Startup Business

The federal government recognized that starting a business during the initial wave of COVID was extremely tough, so they passed the American Rescue Plan Act in 2021 which aimed to assist newer companies with their cash flow and help them through the pandemic. The American Rescue Plan Act made it so new businesses that opened during the pandemic will be eligible to get stimulus funding by identifying them as “ Recovery Startup Businesses.”

In order for a company to be considered a recovery startup business, the following criteria must be met:

If this sounds like your business, you could receive up to $100,000 in the form of a fully refundable tax credit from the IRS!

What Is the Employee Retention Credit?

The Employee Retention Credit (ERC) was first introduced by the Coronavirus Aid, Relief, and Economic Security Act (CARES) in 2020. The main goal of the program was to reward employers for keeping employees on their payroll. The ERC benefits businesses both small and large that were impacted by the challenges posed by the pandemic, covering several issues ranging from a decline in revenue to supply chain issues to impacts from government-mandated shutdowns. This tax credit is often missed or overlooked because businesses are uncertain about the eligibility requirements for newer businesses and because the program has been amended several times since the first rollout. The most recent amendment in December 2021 expanded the eligibility requirements, making this credit more widely available to employers including recovery startups.

How the Tax Credit Works

Unlike a PPP loan, the ERC doesn’t need to be paid back. It is a fully refundable tax credit available to eligible businesses that were impacted by full or partial suspensions or suffered from a decline in gross receipts. And while these criteria (i.e.: gross receipts test and suspensions) may not apply to recovery startup businesses, such startups may still be able to claim up to $50,000 for both the third and fourth calendar quarters of 2021.

Other eligibilities to consider include:

What Can My Business Claim?

If your business is considered a recovery startup business, you can claim around $7,000 per employee on a tax credit as long as the employee is paid $10,000 or more in the eligible time periods (Q3 and Q4 of 2021), but the total amount is capped at $50,000 per quarter. Because recovery startup businesses are given two quarters to apply, you are looking at a potential $100,000 tax credit for your payroll taxes, which could greatly impact your business.

How Do I Claim My Credit?

As a new small business owner, tax credits such as ERC might seem time-consuming and overwhelming. But Stenson Tamaddon aims to make the process as minimally disruptive for you as possible. Our experienced specialists use our proprietary technology to prioritize compliance, maximize your returns, and reduce the headache of filing manually.

Reach out to us today to get started.

The post How Does the Employee Retention Credit Apply to Your Recovery Startup Business? first appeared on Stentam .

The post How Does the Employee Retention Credit Apply to Your Recovery Startup Business? appeared first on Stentam .

Why Form 8821 Matters Now More Than Ever

Mon, 19 Sep 2022 16:19:00 GMT

This year’s tax season is well underway and the IRS is in full swing of processing returns. In fact, this year, they’re working through 8.1 million unprocessed returns, and the tax season is only half over. For businesses filing with an authorized accounting service, including Stenson Tamaddon , one of the easiest ways to streamline returns is by filling out tax information authorization Form 8821 .

What Exactly is Form 8821?

In short, Form 8821 is a one-page tax document that is necessary for accounting services, including Stenson Tamaddon , to be able to file your business tax returns and track your payment status.

According to the IRS , “Form 8821 authorizes any individual, corporation, firm, organization, or partnership you designate to inspect and/or receive your confidential information verbally or in writing for the type of tax and the years or periods you list on Form 8821.”

Of note: Form 8821 does not grant power of attorney rights including speaking to the IRS on your behalf, executing waivers or closing agreements, or any other representative matters. For those additional allowances, you’ll want to talk with the Stenson Tamaddon team and consider filing Form 2848 .

Why File Form 8821?

Form 8821 helps Stenson Tamaddon in a multitude of ways including:

Form 8821 gives Stenson Tamaddon the ability to complete your IRS tax paperwork and track your payment status.

How Do I Get Started?

Form 8821 and instructions can be found on the IRS website, but the Stenson Tamaddon team goes a step further. We take the guesswork out of deciphering tax form instructions and ready forms for clients. Operations Manager Brittany Perez says, “We actually fill out the whole form, their EIN, address, business name, etc. All our clients need to do is print, sign, and mail it back into our firm.”

Once Stenson Tamaddon receives the completed form, we file it directly with the IRS and get to work delivering human resources and technology-enabled services for our clients.

How Stenson Tamaddon Can Help

At Stenson Tamaddon, we’ve helped thousands of customers file. We know how to get things rolling quickly without adding more to your business tasks. Uncover answers to your most pressing questions on our homepage, Stenson Tamaddon .

Take the Next Step

Ready to get started? Contact a Stenson Tamaddon professional today to take the next step. Our done-for-you model means we submit the application with you to the bank.

The post Why Form 8821 Matters Now More Than Ever first appeared on Stentam .

The post Why Form 8821 Matters Now More Than Ever appeared first on Stentam .

Is Your Manufacturing Business Getting the (R&D) Credit it Deserves? FAQs About R&D Tax Credits

Mon, 19 Sep 2022 15:10:00 GMT

Did you know that your manufacturing business could be missing out on $1.25 million in federal Research & Development Credits? Learn answers to your most pressing questions surrounding the credit, what projects and expenses count for it, and how Stenson Tamaddon can help with the next steps.

What Are Research & Development Credits?

Research and Development credits, or Research Credits, are among the most prominent annual tax benefits available to U.S. businesses. The credit was created in 1981 to encourage companies to preserve high-paying jobs in the United States. However, to qualify, a company had to design or produce a novel product or technique, which meant that only a few cutting-edge businesses were eligible.

New rules have been implemented, and the term “research and development” now appears to be a general phrase for what the credit genuinely rewards: progress. This means that businesses within many industries can now qualify for these credits.

If your company spends money on improving or developing processes that apply to a field of science, you may be eligible. This can be as simple as dedicating money to refining your company’s manufacturing process, hiring someone to increase efficiency within your company, etc.

What is Qualified Research?

As the IRS puts it, qualified research “must be undertaken for discovering information that is technological in nature, and its application must be intended for use in developing a new or improved business component of the taxpayer. In addition, substantially all of the activities of the research must be elements of a process of experimentation relating to a new or improved function, performance, reliability, or quality.”

Put simply, qualified research has to be specific, improve your business, involve an unknown element until tested, and rely on science or engineering principles.

What Are Qualified Expenses?

Qualified expenses include wages paid to individuals involved with research activities, including in-house and contractual. It also includes materials, supplies, and tools used for each activity.

Some qualifying actions include the development or improvement of:

Not sure if your activity qualifies for a Research Credit? Get connected with a Stenson Tamaddon professional. We can work with you to check eligibility and start the process of filing for your credits.

My Business is New; Can I Still Qualify?

Yes! New businesses can offset payroll taxes for up to five years with Research Credits. With a maximum of $250,000 allowed per year and a five-year max, this could mean up to $1.25 million in total credits.

For those who’ve been in business longer than five years, they can claim up to $250,000 per year, up to five years, against payroll taxes. Eligible companies need to have less than $5 million in gross receipts and less than five years of gross receipts, including the current tax year.

To Claim the Credit, What Would I Need to Keep Track of?

To apply for the credit, you’ll need to have records for the following:

1) Identify each business component that the claim credit relates to.

If your business has several components that could count for the Research Credit, you’ll want to identify each separate part.

For instance, a manufacturer has identified through different qualifying research activities: Activity 1, Activity 2, and Activity 3. Therefore, each of those three activities must be kept separate.

2) List each research activity performed.

For each business component, you’ll want to take a closer look at each activity. So, first, list out each research activity, including in-house and contractual work.

For instance, with the example above, this manufacturer will list Activity 1: Project 1 and Project 2. Activity 2: Project 1. Activity 3: Project 1, Project 2, and Project 3.

Look through the details of each activity and separate qualified and non-qualified expenses. For instance, travel expenses, meals, and entertainment would not be considered eligible and should not be included.

For contractual work, if the contractor is working on multiple projects, ask for separate invoices for each project so you can keep records as accurate as possible for claiming a Research Credit.

3) Record the names of all individuals who’ve performed each research activity.

4) Categorize quantitative information of what each employee sought to discover

5) Calculate total qualified employee wage expenses, supply expenses, and contract research expenses for the claim year

While organizing research activities, you’ll also want to include each individuals’ name, whether they’re in-house or contractual.

You may want to capture this data in a simple spreadsheet. For example, you could include individual name, activity name, quantitative discovery information, total wages, total supply expenses, and total contract research expenses for each column header. Along with a spreadsheet, you’ll also want to hold onto digital and hardcopy files and label accordingly.

The above memorandum components have been coined the “five items of information.” First mentioned in a recent IRS Press Release , they’re now required with timely filed Research Credit claims for a submitted request.

Because of these new requirements, the IRS has introduced a transition period that runs through January 10, 2023, where taxpayers have 45 days to perfect a Research Credit claim before the IRS’ final determination.

How Stenson Tamaddon Can Help Businesses Determine Qualifying Expenses and Claim Eligible Tax Credits

At Stenson Tamaddon, we’ve helped thousands of customers file for Research Credits. We know how to get things rolling quickly without adding more to your business tasks. Uncover answers to your most pressing Research & Development Tax Credits questions on our services page, R&D Tax Credits .

Take the Next Step to Save

Ready to get started? Contact a Stenson Tamaddon professional today to take the next step. Our done-for-you model means we submit the application with you to the bank.

The post Is Your Manufacturing Business Getting the (R&D) Credit it Deserves? FAQs About R&D Tax Credits first appeared on Stentam .

The post Is Your Manufacturing Business Getting the (R&D) Credit it Deserves? FAQs About R&D Tax Credits appeared first on Stentam .

Best Business Bookkeeping Practices for Keeping Tax Documents

Fri, 16 Sep 2022 18:27:00 GMT

Whether you’re just starting to launch a small business or have been at it for years, bookkeeping is an essential component. But for many, numbers and finances are daunting, and relying solely on software could leave gaps where you’ll want to know what’s entirely there. This past year, questions about taxes have been on the rise. There’s been a 140% increase in Google searches for business tax preparation and a 50% increase in small business bookkeeping . As a result, businesses are looking for answers to bookkeeping questions.

So we’re delving into the top questions about bookkeeping for getting your tax documents in order this year.

Are Bookkeeping and Accounting the Same Thing?

Not exactly, but they do work with one another. Bookkeeping records and tracks business financials for all transactions, operations, and other events relating to the business. Accounting is the measurement, processing, and communications about bookkeeping. Think of it this way – Bookkeeping looks back on the business specifics and accounting looks forward to projecting trends and other financials from bookkeeping records.

Why is Bookkeeping Important for a Small Business?

It’s well-known that bookkeeping is essential if your business gets audited. But keeping up with your books can also help with analyzing and planning for the months and years ahead, streamlining and minimizing accounting costs, and saving countless hours during tax season. You’ll be able to get a snapshot of how your business is performing overall but also get to deep dive into specific analytics of sales, costs, and much more.

What Are the Most Common Business Records?

Some business records will be needed often and should be kept on hand for easy access. Whether it’s journals, ledgers, or digital recordkeeping, you’ll want to find an organization method that works best for your business. Generally, it’s best to track transactions daily for easier long-term recordkeeping.

Whether it’s journals, ledgers, or digital recordkeeping, you’ll want to find an organization method that works best for your business.

How Long Should I Keep Records?

The length of time for keeping records varies but the general rule of thumb is to keep records for a minimum of seven years for IRS reporting. Of course, your insurance or creditors may require you to keep records for longer. You can see a full breakdown of the recordkeeping timelines in this IRS article .

How Do I Pull Payroll?

Depending on how you’re keeping bookkeeping records, the method may look a bit different. But generally, you’ll want to go to your reports menu, find the payroll section, and go to payroll summary. While there, you’ll want to narrow your date range and employee search. Lastly, you’ll want to run the report.

How Can I Improve My Tax Position to Reduce My Payout?

The quickest and most reliable way to improve your tax position is to work with top-quality compliance and specialized accountancy services, like Stenson Tamaddon .

Contact us to learn how we help small businesses like yours with Employee Retention Credits, Research & Development tax credits, and Work Opportunity tax credits.

See firsthand how the Providertech portal works. View a live demo during the webinar, get your questions answered, and test it out for yourself. Get your unique code to demo the portal following the webinar.

The post Best Business Bookkeeping Practices for Keeping Tax Documents first appeared on Stentam .

The post Best Business Bookkeeping Practices for Keeping Tax Documents appeared first on Stentam .

Work Opportunity Tax Credit: The Basics for Employers

Wed, 14 Sep 2022 21:30:00 GMT

Work Opportunity Tax Credit

What is the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) rewards employers who hire individuals that typically face some type of barrier to employment. Upon hiring an individual from a minority group, you can earn anywhere between $1,200 to $9,600 per year. The amount of money that a business can claim per employee varies on which group that individual falls under.

The Work Opportunity Tax Credit allows you (an employer) to create good, stable jobs for eligible workers which leads to valuable job experience for employees. It’s a win-win situation. You can provide job stability and experience which can help an individual become self-sufficient while maximizing your tax credit benefits for building an inclusive and diverse work environment where employees can thrive.

The program’s benefits are available to businesses that hire and retain eligible individuals from any of the 10 target groups, such as those who have been unemployed for an extended period, those with a criminal background, and military veterans.

Before you can claim the Work Opportunity Tax Credit, you must get certification that your employee is in one of the ten groups. Taxable businesses claim WOTC as a general business tax credit against their income taxes and tax-exempt businesses claim the credit against their payroll taxes. Employers have until December 31, 2025, to file.

An employer must file for the tax credit within 28 days of hiring the individual in one of the groups. Using a questionnaire can be an easy way to find out if an employer is a part of any of those groups.

The History Behind the Work Opportunity Tax Credit

The Work Opportunity Tax Credit was first introduced in 1996 as part of the Small Business Job Protection Act. Since its rollout in 1996, it has been reauthorized several times by Congress.

The goal behind the program was to incentivize businesses to hire and retain employees who had previously had difficulty finding or keeping employment due to certain circumstances.

Businesses that hire eligible individuals that fall under any of the 10 categories receive a tax credit that subsidizes and offsets the cost of hiring and employing that individual. The motivation behind the program was not just to get these individuals who face employment difficulties to start earning wages, but also to help them rebuild their long-term employability, economic status, and quality of life.

Who is eligible for the Work Opportunity Tax Credit?

If you have hired eligible individuals from any of the following groups, you might be able to receive a credit worth up to $9,600:

To be eligible, employees must be in their first year of hire. You will not qualify if the individual you hired is a relative, an individual that was rehired, or someone who owns a large portion of the company. Employees must meet the minimum hours worked requirement which is 120-400 hours. In the first-year period for employees that worked 120-400 hours, credit is 25% of these first-year wages. Employees that worked 400 hours or more can be credited 40% of first-year wages

Each of these groups has eligible individuals with an underutilized skill set that is a very valuable asset to businesses, especially with the recent labor shortages across the country in mind. WOTC serves as a voice for those who are typically unrepresented and forgotten about. Participation in this program is a reminder to employers that these individuals are willing and able to work.

How to Take Advantage of the Work Opportunity Tax Credit

Businesses around the country are creating new job opportunities and searching for eager workers to fill their vacant roles. Taking part in this program is a great way to show that you are dedicated to inclusive hiring practices and connecting individuals to stable jobs. It is important to invest in a great opportunity for both your business and the eligible employees looking to rebuild their lives and start a new chapter. Many of the individuals in these specific groups have had difficulties with employment and are eager to get back to work and contribute to their families and communities in a positive way and you can help them get there by reaching out to us to get started.

At Stetson Tamaddon, our team of experienced specialists is dedicated to helping you while you help others. Our unique compliance-driven technology will help you go through the process with as little stress as possible. Our goal is to ensure that you receive the maximum return with minimum hassles. Don’t leave any unclaimed money on the table. Get in touch with one of our specialists today to find out how to get started.

The post Work Opportunity Tax Credit: The Basics for Employers first appeared on Stentam .

The post Work Opportunity Tax Credit: The Basics for Employers appeared first on Stentam .

5 Myths About Employee Retention Credit and PPP Loans

Wed, 14 Sep 2022 20:05:00 GMT

Do you know that tale about George Washington and the cherry tree? We hate to break it to you, but it never happened . Unfortunately, myths have a way of getting woven into “truths” that we know and can persist for centuries. When it comes to the Employee Retention Credit (ERC) and Paycheck Protection Program (PPP), myths have been surrounding the two since COVID began. Can you apply for both? Will applying for both cause repercussions? If your gross business receipts didn’t drop, will you still qualify? The deadline has passed – you can’t still apply, can you? It’s too much of a hassle – why bother? In this blog, we’re digging into these myths to uncover the truth behind ERC and PPP and what you can do to help your small business receive thousands in tax credits.

Paycheck Protection Program, or PPP, forgivable loans are backed by the Small Business Administration (SBA). They were created in March 2020 to assist businesses by keeping their workforce employed during the COVID-19 crisis. Small business owners could apply for the first or second draw through an SBA-backed bank or lender, and funds were deposited directly into their bank account if approved. PPP loans could be used for payroll or other operating costs such as rent, mortgage interest, or utilities.

PPP regulations require business owners to spend at least 60 percent on payroll, with the remaining balance available for the following:

Employee Retention Credit (ERC), however, is a fully refundable tax credit filed against W-2 employment taxes. Like the Paycheck Protection Program, it was also created during the COVID-19 pandemic to help small businesses recover from the economic fallout. The ERC was created in 2020 by the Coronavirus Aid, Relief and Economic Security Act (CARES) and is a credit to incentivize small and medium businesses to retain employees during the pandemic. Many companies will argue that the ERC has been their lifeline post-coronavirus outbreak.

Small business employers that had under 500 full-time employees in 2021 are eligible to receive ERC refunds during the calendar quarter when qualifying wages were paid. Your company can receive a credit for each employee for the first $10,000 in wages paid per quarter.

Unlike PPP, ERC funds are filed through the IRS and given as a paper check. As a result, they can be used on any business expense and are not limited solely to expenditures that PPP covers.

So now that you know what ERC and PPP are, let’s get right to it. We’re tackling the five top myths floating around since the Kansas City Chiefs won their second Super Bowl. As a small business owner, we know you’ve got many plates to juggle. That’s why we’re breaking down the essentials with each question. So, skip the hours of searching and get your PPP and ERC questions answered right now.

Myth #1: If You Applied for a PPP Loan, You Aren’t Eligible for ERC

One of the most persistent myths is that if you’ve already applied for a PPP, you’re ineligible to apply for an ERC. But if you’re a small business owner who has struggled to keep the doors open through COVID-19 and is researching available funds, you’re in luck.

Truth: You Can Still Qualify for an ERC Even If You Applied for a PPP Loan

Originally federal law did not allow small businesses to claim the ERC and PPP simultaneously, but the law changed. The Taxpayer Certainty and Disaster Tax Relief Act enables employers who’ve applied for PPP retroactively to apply for ERC for the years 2020 and 2021. According to the IRS website, “An employer that is eligible for the employee retention credit (ERC) can claim the ERC even if the employer has received a Small Business Interruption Loan under the Paycheck Protection Program (PPP).” Even businesses that received PPP loans are eligible to claim the ERC, which maximizes the relief funding to help your business move forward.

So how much exactly could you be getting with an ERC? For 2020, up to $5,000 is available for each W2 employee. In 2021, federal law increased rates per employee to $7,000 for Quarters 1, 2, and 3 for a yearly allowance of $21,000 maximum.

There are a few caveats to keep in mind:

For instance, an employer who spent all their PPP on payroll expenses would not be able to claim the ERC for the payroll expenses covered by PPP funds. But an employer who only spent 60% of their PPP on payroll and the remaining 40% of funds on utilities could claim the portion of payroll that was paid out-of-pocket and not paid with PPP funds.

Savvy employers may have been able to maximize their PPP for draws one and two, had them forgiven, and then maximized ERC allocations, but if you’re like most small business owners and you’ve already spent 100% of PPP loans on payroll, you may be thinking that it’s a bit too late to claim ERC funds. However, you may still be eligible. There may be specific quarters for which you could claim Employee Retention Credits, and that’s where Stenson Tamaddon can help. Our team of specialists can walk with you each step of the way and unlock your full potential for credit relief.

Myth #2: You Shouldn’t Apply for Both Employee Retention Credit and PPP loans

If you’ve taken the PPP and are on the fence about applying for an ERC, you could be leaving money on the table. In a recent Forbes article, the IRS management projected that up to 80 percent of small and medium businesses were eligible for taking the ERC, but the reality is that far fewer businesses have taken the necessary steps to claim the credit.

Truth: Utilizing Both Economic Relief Programs Could Positively Impact Your Business

While it’s true that small businesses initially were not allowed to claim both the ERC and PPP, they now can. Taking advantage of both programs can give additional economic relief to your small business.

Since you can use the ERC however you see fit for your business, you can alleviate some of the burdens of meeting payroll with PPP funds and doing what you must to keep the doors open by filing for the ERC. By utilizing both economic relief programs, you could positively impact your business. Connect with the Stenson Tamaddon team and we can help you maximize your credit with a focus on compliance. We’re ready and available to serve you.

Myth #3: If Your Business’ Gross Receipts Didn’t Drop 50%, You Won’t Qualify

When the ERC was originally introduced, the program wasn’t benefitting as many businesses as intended. So, in December 2020, Congress passed the Taxpayer Certainty and Disaster Tax Relief Act which made substantial changes to the program such as increasing the maximum credit amount that can be claimed per employee and modifying the definition of qualified wages.

Truth: The Tax Credit Could Also Be Available to Businesses Affected by Partial or Full Suspensions

If your revenues didn’t drop by half, your business could potentially still qualify for the Employee Retention Credit. How? Alongside revenue reductions, ERC is also available to businesses affected by government-ordered partial or complete shutdowns.

For instance, if you own a restaurant and had to change dine-in experiences to take-out due to partial shutdowns, you could be eligible to receive Employee Retention Credits. After all, you couldn’t fill seats inside the restaurant because of government orders. Or suppose your business had to limit customer seating with six-foot regulations, reduce the number of staff to allow for social distancing, increase the time needed to disinfect surfaces or limit hours due to COVID-19. In each case, you could be eligible for up to $26,000 in retroactive ERC credits.

Many businesses were able to tread water during the height of the pandemic, but that doesn’t disqualify them from the Employee Retention Credit. After all, the Employee Retention Tax Credit (ERC) is the government’s way to give back to businesses and essentially reward them for keeping employees on the payroll, even if they were forced not to work for some time.

Was your business partially or fully shut down during the pandemic? Did you have to adjust payroll and procedures in 2020 or 2021? If so, talk with one of our tax credit specialists today to learn more about how you can get the money you deserve .

Myth #4: The Employment Retention Credit Ended. It’s Too Late to Take Advantage

Truth: The Employment Retention Credit is Still Available

While it’s true that the Employee Retention Tax Credit is no longer available for wages paid after the third quarter of 2021, many small business owners may not realize they can still apply for the credit. And in fact, they have three years from their original employment tax filing deadline to claim the credit retroactively. So, if you’re a small business owner with W-2 employees impacted by COVID-19 regulations and shutdowns in 2020 or 2021 you could still claim the credit if you are eligible.

Many business owners may have been dissuaded from applying for ERC and PPP due to shifting regulation changes, but since the rules for claiming both credits were expanded in 2021, some small business owners may still be able to file an amended payroll tax return.

Don’t wait! If you’re ready to take advantage of the Employee Retention Credit, connect with our team of specialists today.

Myth #5: Filing for the Employment Retention Credit Will Be Too Much of a Hassle

Like most things in life, you’re probably asking yourself, “Is it worth it?” When it comes to getting that drive-through coffee remade because they forgot to add an extra sugar, we’d say the answer is probably no.

But when it comes to potentially receiving tens of thousands of dollars back for your business after an incredibly challenging two years, the answer is a resounding yes. If your business has suffered during the pandemic, you have a great chance of eligibility.

Truth: Filing for the Credit Can be Easy

At Stenson Tamaddon , we understand the need to clearly and effectively provide tax solutions for businesses like yours and want to help them receive the available funding they’re eligible for quickly and promptly.

We can determine if you are eligible for ERC, help you fill out a Form 941X based on your employer’s quarterly federal tax return, and even file for an advance payment on your credit. Our job is to maximize the credit you receive and minimize any risks that come with it by utilizing our proprietary technology that prioritizes compliance. It’s safe to say that we are confident in what we do and would be proud to be your ERC partner.

Get the money you deserve. Contact Stenson Tamaddon to start filing for your ERC today.

The post 5 Myths About Employee Retention Credit and PPP Loans first appeared on Stentam .

The post 5 Myths About Employee Retention Credit and PPP Loans appeared first on Stentam .

Employee Retention Credit: How Your Small Business Can Benefit

Thu, 08 Sep 2022 17:06:00 GMT

In 2020, the COVID-19 pandemic created a ripple effect of challenges and disruptions for small businesses across the nation. Government mandates and shutdowns caused many businesses to see a significant decline in revenue, which in turn created the massive upswing of businesses that had to close their doors. The government created several relief programs with the goal of helping the economy recover and keeping businesses afloat during the unprecedented crisis. These programs were intended to give small businesses some financial backing in order to avoid permanent closures as well as to keep valued employees on the payroll.

What is the Employee Retention Credit?

The Coronavirus Aid, Relief, and Economic Security Act, otherwise known as the CARES Act, was passed in March 2020. The goal of the CARES Act was to stimulate the economy by providing $2.2 trillion dollars of emergency assistance in response to the raging pandemic and the Employee Retention Credit (ERC) was a part of that plan. The ERC is a fully refundable tax credit that serves as the solution to get small businesses back on their feet and gives them the ability to keep their doors open. It has proved to be an extremely valuable form of aid for businesses navigating a post coronavirus outbreak world.

The PPP has been widely discussed but its lesser-known counterpart, ERC, might be just as beneficial in recovering lost revenue from your business! We’re here to show you what you need to qualify, and the steps needed to move forward to get your business back on track. Let’s get started!

Origins of the ERC

Many small businesses were experiencing the crushing effects of economic decline during the initial waves of the pandemic. The government wanted to create something that would be a lifeline in sustaining businesses and helping them recover lost revenue. The goal was to keep employees on the payroll even if business operations had to be scaled back or employees were not working during the time.

In December 2020, Congress passed the Taxpayer Certainty and Disaster Tax Relief Act of 2020 which expanded the ERC program since the credit was not reaching as many businesses as originally intended. The goal of the Relief Act was to provide relief to even more businesses and did so by expanding the category of employers that may be entitled to claim credit and changing the definition of qualified wages.

ERC Timeline

ERC credits apply to qualified wages paid to employees during these timeframes:

2020

2021

Eligible businesses may also file retroactively meaning that the timeframe to claim on past quarters will be open for about three years. You can apply for a retroactive ERC on qualified wages for prior calendar quarters by filing Form 941-X.

How Much Is It?

For 2020, the maximum credit per employee for the whole year is $5,000. For 2021, the maximum credit per employee is $7,000 for each quarter, bringing the grand total to $21,000 total for the year. This means you can receive up to $26,000 per employee!

How Is ERC Different From PPP Loan Forgiveness?

While both ERC and PPP were made with the intention of providing relief to businesses there are a few notable differences between the two such as funding and cost to participate in the program.

The PPP is a forgivable loan and if a business complies with the terms of the loan, which includes spending the funds on payroll, the loan will not need to be repaid. However, the ERC is a tax credit that is paid via a check from the IRS to businesses and will never need to be repaid.

Can I Still Apply if I Received a PPP Loan?

Absolutely! Initially, the CARES Act prohibited business owners that were participating in the PPP program to apply for the ERC. However, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 made it possible for businesses to take advantage of both the PPP and the ERC. Due to this change in federal law, there have been many misconceptions floating around and many business owners are still under the impression that they cannot receive both which is causing them to leave unclaimed cash on the table. The key to remember is that businesses are unable to claim the ERC for wages that were paid with PPP funds.

How Do I Know if I Qualify?

The ERC program continues to offer significant, fully refundable tax credits to a variety of industries and employers who kept employees on their payroll even though normal business operations were not happening. Determining if you qualify for ERC might be confusing since it was rolled out around the same time as PPP, but that doesn’t mean you should shy away from reaping the benefits.

In order to be considered eligible for ERC, your business must have been negatively impacted in at least one of these two major ways:

Example: If you own a restaurant and were forced by government mandates to operate at half capacity or provide take-out only.

The decline in gross revenue is covered by the date when the losses started to occur and end with the date when revenue climbed back up to at least 80%. In 2020, a 50% decline in gross revenue from 2019 is required to be eligible and in 2021, only a 20% decline in gross revenue from 2019 is required to be eligible.

What Classifies as Qualified Wages?

Determining qualified wages is crucial to maximizing your tax credit and needs to be done so with compliance in mind. The IRS defines qualified wages as “wages paid by an Eligible Employer to some or all of its employees after March 12, 2020, and before January 1, 2021.” The first step when determining qualified wages is to decide how many full-time employees your business employed during 2019.

Depending on how many FTEs your business had in 2019, qualified wages could either refer to wages for employees who were unable to provide services due to a full or partial suspension of operations due to a governmental order or a significant decline in gross receipts or to wages of any employee during any period in the calendar quarter when business operations were either partially or fully suspended under the same circumstances. Utilizing a knowledgeable tax solutions provider, such as Stenson Tamaddon, can help you navigate the complexities of this process in a compliance-driven manner.

How Does ERC Benefit Small Businesses?

The ERC program can benefit your small businesses in a multitude of ways. Unlike the PPP loan, which may not be forgiven depending on how the funds were used, the ERC is a tax credit sent to your business to use as you best see fit. While qualified wages can not be applied to both the PPP loans and the ERC, you can leverage both programs to maximize the incentives for your business.

Why File with Stenson Tamaddon?

Stenson Tamaddon has extensive knowledge in finance and working with businesses of all sizes. It can be a daunting task to figure out all that is needed to file for ERC, which is why it is important to file with an experienced firm that is credible and knowledgeable on the subject. With Stenson Tamaddon, you can be confident that you and your business will be our priority and we will work diligently to get you the maximum amount of tax credits with the least number of risks. We will be able to determine and walk you through the process of determining if your business meets all the eligibility requirements to file for the ERC. Our job is to minimize the possibility of unclaimed money left on the table.

At Stenson Tamaddon, we pride ourselves on assisting small businesses to reach their full potential in filing for the ERC. We offer cutting-edge, compliance-first technology that supports client success in an efficient and safe manner. Businesses all over choose to work with us because we do not cut corners when it comes to your business!

Key Points

Reach out to one of our specialists today to learn about your business’s eligibility. Working with Stenson Tamaddon will save you time and give you peace of mind that your documents are filed correctly and accurately. We’re here to walk you through every step of the way so that you can get the money you deserve!

The post Employee Retention Credit: How Your Small Business Can Benefit first appeared on Stentam .

The post Employee Retention Credit: How Your Small Business Can Benefit appeared first on Stentam .

Omega has moved to a new home!

Wed, 10 Aug 2022 20:46:00 GMT

We are thrilled to announce that due to our remarkable growth, we have moved to a new office location!

Here is our new address:

Omega Accounting Solutions
15101 Alton Parkway, Suite 450
Irvine, CA 92618

Our new office is located in the beautiful FivePoint Gateway in Irvine and our space will house more than 100 team members. The article below shares more information regarding our exciting expansion and new headquarters.

Our new facility offers us the opportunity to better serve our loyal clients, work with our valuable business partners while continuing to pursue our mission to help small business owners. Please update your records with our new address. Our phone numbers and email addresses will remain the same, as will our website address and social media accounts. We look forward to continuing to serve your needs at our new location.

Feel free to contact us with any questions.

The post Omega has moved to a new home! appeared first on Omega Accounting Solutions .

ERC Credits for Gyms and Fitness Centers

Sun, 24 Jul 2022 19:02:00 GMT

ERC Credits for Gyms and Fitness Centers

Gyms and fitness centers are where we all go to work on our bodies, our overall fitness, and for many, a haven for mental health. It’s a place we go to sweat, so it shouldn’t be the owners of gyms and fitness centers who are sweating trying to figure out how to retain employees during the pandemic or even keep their doors open. The Employee Retention Credit (ERC) is an important tool for owners to recoup lost revenue and receive benefits for investing in their people. ERC Specialists has helped many gyms receive valuable ERC funds, including Legends Boxing and Fit Body Bootcamp .

What is the state of the industry?

In many parts of the country, gyms and fitness centers are returning to normalcy, albeit with more frequent sanitation measures in place. However, for gyms in many large cities like New York, mask mandates and limits on indoor gatherings have many gyms still struggling to meet pre-pandemic revenues. Increased employee cost and business costs to incorporate pandemic-required changes have created additional difficulties for gym owners.

What is the ERC?

The ERC, also known as the Employee Retention Credit, is a federal program passed by Congress as part of the CARES Act. It’s designed to reward employers hit hardest by the effects of the pandemic for retaining part or all of their workforce despite a loss in revenue or ability to function as a business. The ERC started in 2020, and wages through September 30, 2021, qualify for the credit. Companies can claim these credits until April 15, 2025, using ERC providers such as ERC Specialists.

What are the benefits?

The ERC represents a sizeable benefit for employers, totaling up to $26,000 per W-2 employee. In addition, employers can receive the credit even if they also received a PPP loan. Please see the IRS documentation on the ERC application process for specific benefits amounts available to you in particular quarters. ERC Specialists is also happy to provide a consultation and set up your organization’s application for ERC on your behalf.

Changes Since Launching

The COVID-19 pandemic and our understanding of its effects on the economy and small businesses has changed dramatically since March 2020. As such, the ERC eligibility has changed from 2020 to 2021, offering more businesses the chance to benefit. In addition to an increase from $5,000 to $7,000 per employee per quarter, more ways to qualify have been added. The amount of revenue reduction necessary to receive benefits under that type of qualification was changed from 50% to 20%.

Eligibility

The three ways to qualify for the ERC are the same for all businesses but may take on a different outward appearance depending on the industry. A company is eligible if they were forced to suspend or significantly reduce operations because of a government mandate affecting its area of operation or a reduction in revenue compared to 2019. The revenue reduction type of qualification is not based on gross profit but revenue, so increases in business expense costs are not factored in. Some ways that fitness companies have qualified include social distancing requirements that forced them to reduce the number of customers served and shutdown-caused supply chain disruptions that made them unable to receive needed equipment on time. The best way to find out if your business is eligible is to speak with an ERC Specialist.

How to Apply and Qualify

To apply through ERC Specialists, you must submit a form after gathering all the required data points to prove eligibility. This includes a list of all full-time employees and their wages for 2020 and 2021, any PPP loan documentation you may have, and your quarterly 941 tax returns.

In Conclusion

The ERC is an excellent benefit for gym and fitness centers to begin returning to normalcy after the pandemic, is relatively painless to apply for, and greatly benefits the recovery process. We at ERC Specialists are ready to help you apply for and receive all you’re entitled to from this refundable tax credit. Contact us today to begin applying and get your ERC funding process rolling.

The post ERC Credits for Gyms and Fitness Centers appeared first on ERC Specialists .

ERC Credits for Hotels and Resorts

Sun, 24 Jul 2022 18:37:00 GMT

The Coronavirus pandemic was hard on many companies and businesses, but one of the hardest hit industries is the hospitality industry and in particular hotels and resorts. Shortly after the lockdown began in March 2020, hotels were forced to either close down completely or refocus their businesses to adapt to a constantly changing travel landscape. Due to government shutdowns, supply chains have been disrupted, business travel has been drastically reduced, and hotels have been required to shut down parts of their operations, even beyond the initial lockdown period. The good news is, all of these hardships can now qualify hotels, motels and resorts for Employee Retention Credits (ERC).

What is the state of the industry?

Many hotel businesses were able to reopen in the Summer of 2020, though restrictions on capacity and precautions needed for safe operations often inhibited a return to the levels of profitability enjoyed before the pandemic. Difficulties in keeping occupancy steady during the waves of variants that have continued unabated, making it hard for hotel owners to return to profitability. Many markets have seen growth during 2022, though supply chain and lingering shutdown-related issues are still preventing some properties from fully returning to pre-pandemic levels.

What is the ERC?

Launched in March 2020, the ERC (also called ERTC) is a tax relief opportunity passed by Congress as part of the CARES Act that was designed to keep employees working and employers able to retain their staff on the payroll. Since its creation, it’s awarded millions to qualified businesses. Even though the financial forecast is looking more optimistic in 2022, many businesses still qualify to cover costs from 2021 and 2020.

What are the benefits?

During 2020 and 2021, up to $26,000 per W-2 employee is available to assist businesses, so the ERC represents a sizeable opportunity for relief in the form of tax credits. Better yet, the ERC is available even if the business has received Paycheck Protection Program (PPP) loans or Shuttered Venue Operator Grants. Hotels can receive ERC tax credits for both full-time and part-time employees, making it a very lucrative tax credit.

Changes Since Launching

In 2020, many businesses that greatly reduced their staff were not eligible for the ERC credit, however, the ERC program was greatly increased for the tax year 2021 and applies to the first three quarters of 2021. The credit maximum has been revised from $5,000 per employee in 2020 to $7,000 per employee per quarter in 2021. The IRS also expanded the “small business” distinction from under 100 to under 500 employees, among other changes.

Eligibility

The ERC program is designed to benefit organizations that were forced to either fully or partially shut down as a result of government orders during the pandemic. Partial shutdowns include impacts such as supply chain disruptions, travel restrictions, reduction in services offered, reduction in capacity, and more. A decline in gross receipts of 50% in 2020 or 20% in 2021), when compared to 2019, is another way to qualify.

How to Apply and Qualify

To apply, be sure to gather the appropriate data to prove eligibility. This includes a list of full-time employees for 2019 to use for comparison, plus gross receipts from 2019, 2020, and 2021, if you’re using revenue reduction to qualify. You’ll also need to gather quarterly 941 tax returns, PPP loan documents, and employee wage data from 2019, 2020 and 2021. Bear in mind that although they can be received concurrently, an employer cannot use the same specific wages used for a PPP loan forgiveness program for the ERC, and vice versa.

In Conclusion

All in all, the ERC credit is a great way for hotels and resorts to receive compensation for some of the financial challenges they have experienced over the past few years. Contact one of our ERC Specialists to help assist your application and review process today. Things are looking up for hotels and resorts, and we’re excited to help the hospitality industry get back on its feet faster.

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What is the Work Opportunity Tax Credit?

Wed, 13 Jul 2022 20:31:00 GMT

What Is the Work Opportunity Tax?

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who invest in hiring Americans from certain target groups who have previously faced barriers to employment.

The goal of this is to act as an incentive for employers to exemplify workplace diversity in return for a maximum tax credit. It is supposed to promote the hiring of American workers of a certain target group while providing a federal tax incentive to employers who hire them. Employers have until December 31, 2025 to file. The amount of the tax credit under the WOTC program depends on the target group the employee belongs to as well as qualified wages paid and hours worked. Taxable employers can carry the current year period’s unused WOTC back one year or forward 20 years.

Where Did It Come From?

The WOTC was created back in 1996 as part of Section 1201 of the Small Business Job Protection Act of 1996 and has since been updated on multiple occasions. Even back then, employers at for-profit organizations could claim a tax credit against federal tax liabilities for hiring members of certain groups. Tax-exempt employers can claim WOTC against their payroll taxes.

In 2015, The Protecting Americans from Tax Hikes Act (PATH Act) allowed qualified employers to claim WOTC for targeted group employee categories that were apparent before the enactment of the PATH Act as long as the individual began working for them after December 31, 2014 and before January 1, 2020. In the fiscal year of 2021, over 2 million certifications were filed by state workforce agencies. These SWAs received over $18 million in support of the WOTC program.

Workforce programs such as this one were created as a voluntary act for businesses. Therefore, businesses do not need to send a job offer to an individual in one of the target groups. However, businesses are encouraged to invest in American job seekers who have faced barriers to unemployment in order to establish diversity in the workplace.

How Do You Qualify?

When looking into employer eligibility for the WOTC program, there are a few qualifications businesses must meet. Employers must verify that the new hire was part of the target group in order to claim work opportunity tax credit.

What is the target group for an eligible employee?

Individuals must have a required certification from a state workforce agency, must be within one of the ten targeted groups, and be in their first year of employment in order to be eligible. Several factors that can prevent an employer from qualifying are if they hire a family member, former employee, or someone who will have a large share in the company. In order to be eligible, employees must work a minimum of 120-400 hours. Within a qualified first-year period for employees who worked between 120-400 hours, credit is 25% of these first-year wages. For employees who worked over 400 hours, 40% of first-year wages can be credited.

If you are interested in creating a diverse workplace by hiring individuals within the specified target groups, there are many resources to help you find qualified candidates such as American Job Centers. Some examples of these can be the Veterans Administration, social services offices, and various vocational rehabilitation centers. Some candidates even have certain certifications that tell potential employees the amount of credit they could earn if they hire this ‌individual.

What Should You Pay Attention To?

After employees are deemed as part of the target group, employers must file for the tax within 28 days of the employee’s start date. Employers can find out if employees are a member of the target group by asking them to fill out a questionnaire upon hire.

To file for WOTC, the (Internal Revenue Service) IRS Form 8850 must be completed, along with several forms from the Department of Labor. IRS Form 8850 acts as a pre-screening notice to make a certification request to the state workforce agency (SWA). DOL requires employers to fill out an Individual Characteristics Form (ICF) and ETA Form 9061 or 9062. The purpose of the forms are to ensure the individuals qualify as one of the targeted groups. All forms can be submitted via email, online, or direct mail.

Both new businesses who do not have much tax credit and larger companies with a large credit portfolio can take advantage of the WOTC. Plus, businesses can apply for more than one credit for the same employee. However, credit is limited to the business’ income tax liability. Credit will not affect the employer’s Social Security tax liability on their tax return. Taxable employers can claim WOTC as a general business credit against their income taxes.

Why Should You Partner With Us When Filing for WOTC?

The work opportunity tax credit can confuse those who have not previously filed. Working with us will save you time and effort, and will ensure you file correctly to find out the amount of your business’ income tax liability. We will make sure that all the requirements for the IRS, DOL, and U.S. Employment and Training Administration are met in order to successfully create your WOTC account. Contact us today.

The post What is the Work Opportunity Tax Credit? first appeared on Stentam .

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What is ERC? A Complete Guide to the Employee Retention Credit

Wed, 13 Jul 2022 05:22:00 GMT

The Employee Retention Credit (ERC) is a refundable payroll tax credit filed against employment taxes. ERC was introduced with the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020 during the COVID-19 pandemic to help businesses recover from the economic fallout that occurred.

It essentially provides funding to businesses to make up for some revenue lost during the pandemic. Some companies might even argue that the ERC has been their lifeline post-COVID-19, enabling them to retain critical employees and continue business operations.

The ERC has been amended three separate times after it was originally enacted as part of the CARES Act by the Taxpayer Certainty and Disaster Relief Act of 2020 (Relief Act), the American Rescue Plan (ARPA) Act of 2021 and the Infrastructure Investment and Jobs Act (IIJA).

Credit from the ERC can potentially reach up to $28,000 per employee for 2021. It essentially rewards companies that had employees on payroll during the pandemic. Since the United States government orders created restrictions that financially affected businesses, this is a way of compensating those impacted businesses.

Key Takeaways

Finally, partnering with us can save you time and effort when filing your ERC. Whether it be finding if your business is eligible for ERC or filing for advance payment of employer credits and R&D tax credits, we’re here to walk you through the whole process and ensure that your statement is accurate.

How Was This Refundable Tax Credit Established?

Because many businesses faced economic decline during the pandemic, the U.S. government passed the ERC as an opportunity for businesses to get funded for lost revenue. It encouraged employers to keep their employees on the payroll, even if they were not working during COVID-19.

The goal was to sustain the economy during the coronavirus pandemic. Congress voted to pass a $1.9 trillion relief bill so that businesses could benefit. The IRS initially predicted that 70 percent of businesses would claim the employee retention credit.

In the early stages of ERC under the CARES Act, not as many businesses were able to qualify as Congress intended, due in part to an inability to meet the requirements for sharp revenue declines. Businesses found ways to adapt and sustain revenues at only marginally lower levels than before. Expansions of the ERC became necessary to achieve the intended benefit for more businesses.

The Families First Coronavirus Response Act was passed at the same time as the CARES Act. Many employers can qualify for both ERC and the FFCRA .

Since March 2020, the ERC program has undergone many changes. With them came questions from both businesses and tax professionals. The Internal Revenue Service (IRS) responded with clarifying guidance on frequently asked questions, clearing a path for businesses and their tax advisors to claim accurate benefits with confidence.

Benefits of the Employee Retention Credit

The employee retention credit has helped keep many businesses stay afloat and bolstered the finances of others, especially small companies. Here are a couple of added benefits of the program:

1. You can reinvest the employee retention credit funds to hire new staff members.

Employee retention rates suffered due to the COVID-19 pandemic. Whether through layoffs or changes in workforce dynamics, employers were understaffed. The employee retention credit provides them with additional cash flow in the form of a tax credit, which can be used to bring back staff and hire new employees.

2. If you received funds from the Paycheck Protection Program, you might still qualify for the employee retention credit.

When the employee retention credit was first announced by the U.S. government, businesses that received a Paycheck Protection Program (PPP) loan weren’t eligible for an employee retention credit. However, through the Consolidated Appropriations Act of 2021, eligible businesses that received a PPP loan can now retroactively apply for the ERC. The only caveat is that you cannot include wages for ERC purposes if the wages were paid with forgiven PPP loan proceeds. Wages in excess of PPP loan proceeds may still qualify for the ERC.

Who Qualifies for the ERC?

Your business may be eligible for the ERC if its operations were fully or partially suspended by governmental COVID-19 orders, thereby limiting commerce, travel, or group meetings. You might also be eligible if your business experienced a significant decline in gross receipts during 2020 or within the first three quarters of 2021 . New startup businesses that began operations after February 15, 2020, may also qualify, regardless of revenue.

There are two main ways to be eligible for stimulus refunds:

1) Employers are eligible for ERC if they match the required decline in revenue within any quarter of 2020 or 2021.

2) Employers are eligible if they have W-2 employees.

Up to $5,000 can be credited per employee from March 13, 2020, to Dec. 31, 2020, as well as up to $21,000 per employee between the period of Jan. 1, 2021, to September 30th 30, 2021. Depending on how large your company is, you could earn up to six or seven figures back in funding. Eligibility can be determined by electing to use the immediately preceding calendar quarter.

How Much Money Will Your Business Receive From ERC?

How much your business receives from an employee retention tax credit varies based on the number of employees your business had in 2019, 2020, and 2021. The forgiveness of PPP loans may also impact your credit. Here’s a year-by-year breakdown of the ERC program:

How Do I Claim the Employee Retention Tax Credit?

If you have an eligible business, you can retroactively claim the ERC for 2020 and 2021 . How? By filing IRS Form 941-X to amend your filed returns (Form 941) for the quarters during which your business was an eligible employer.

If you’re filing for the employee retention credit, make sure your Form 941 for 2020 and 2021 were filed, received, and processed by the IRS before you file Form 941-X. Unlike Form 941, Form 941-X cannot be filed electronically. Before you claim the credit, make sure you have the following data:

Deadline for Claiming Employee Recruitment Fund

The ERC program has technically ended, but eligible employers still have time to claim the employee retention credit. How? By filing a Form 941-X for relevant quarters to amend previously filed forms.

You may correct underreported taxes on a previously filed Form 941 if you file Form 941-X within three years of the date Form 941 was filed. Each of these time frames is called a “period of limitations.” For purposes of the period of limitations, Forms 941 for a calendar year are considered filed on April 15 of the succeeding year if filed before that date.

Example:

You filed your 2020 second-quarter Form 941 on July 20, 2020, and all payments were made on time. The IRS treats the return as if it was filed on April 15, 2021. On March 1, 2023, you discovered that you overreported social security and Medicare wages on that form as a result of neglecting to claim the ERC.

To correct the error and claim your credit, you must file Form 941-X by April 15, 2024, which is the end of the three-year period of limitations for Form 941, and you must use the claim process.

I Received PPP – Can I Still Apply?

Businesses that received Paycheck Protection Program (PPP) funding are still eligible to file for Employee Retention Credit. In fact, ERC funds can be more than funds received from the PPP loan forgiveness. Even non-essential businesses are eligible to receive funding. Therefore, PPP loans from 2020 or 2021 do not affect a business’ eligibility.

Small employers with a number of full-time employees under 500 are eligible to receive ERC payments during the calendar quarter when wages are paid out. Part-time and seasonal employees do count as part of this number. The fewer full-time employees in your organization, however, the less funding you are eligible to receive back. Total credit is calculated based on the total number of employees.

How Do I Qualify?

Many industries faced decline during the pandemic. If your company’s gross receipts were 50% lower in a certain quarter than they were in the same quarter of 2019, pre-Covid-19, your business qualifies to file for ERC. Since there have been several changes within the last year regarding Employee Retention Tax Credit, many businesses are disqualifying themselves based on rumors, when in reality, they could very well qualify.

If your business has faced any of the below during 2020 or 2021, you may qualify:

If your business belongs to one of the following industries, you could qualify for credits:

Both essential and non-essential businesses are eligible for the payroll tax credit. All businesses were forced to adapt to safety restrictions and even faced a partial shutdown due to the pandemic. The Employee Retention Tax Credit (ERC) is the government’s way to give back to businesses and essentially reward them for keeping employees on the payroll, even if these employees were forced not to work.

Conclusion

If you’re considered an eligible employer according to the ERC program, don’t miss the opportunity to get a tax credit from the government. Applying for the retention credit might sound difficult and time-consuming, but investing in the services of tax experts like those at Stenson Tamaddon can help you maximize the amount of your business’s credit. Learn more today!

FAQs

Are ERC refunds taxable?

Although the employee retention tax credit is considered tax-exempt income on the federal income tax return, it is subject to expense disallowance rules . Therefore, you must reduce your wage deduction by the amount of the credit received. If you are filing a claim for the ERC on an amended Form 941-X, you may be required to file an amended income tax return for the applicable year.

Does the employee retention credit have to be paid back?

Your employee retention credit is not a loan or an advance and does not have repayment terms.

What are considered wages paid under the employee retention credit?

Qualified wages under the employee retention tax credit consist of those paid by employers to employees while operations were fully or partially suspended by governmental COVID-19 orders or during the period in which the business experienced a decline in gross receipts. Covered qualified wages include cash wages, both hourly and salaried, along with vacation pay and any other taxable wages. Qualified wages under the employee retention tax credit program also include certain health plan expenses allocable to those wages.

Qualified wages under the employee retention tax credit program are limited to the first $10,000 of compensation paid to any employee during a calendar year (2020) or calendar quarter (2021) and can be claimed for wages paid or incurred from March 13, 2020 through December 31, 2021. There are some restrictions on the fourth quarter of 2021 if you are not a recovery startup business.

Why is working with us the best way to file for ERC?

Hopefully now you can confidently say you are more familiar with ERC. But, if you are not very familiar with how to file for Employee Retention Credit, you’re in good hands with Stenson Tamaddon. Our job is to maximize the credit you receive and minimize any risks that come with it.

It’s no secret that there are a lot of logistics that go into filing for your business’ ERC. That’s where we come in. We handle finance on a regular basis, so let us be the experts and we’ll make sure your business receives the maximum credit. We can help uncover all funding opportunities your business qualifies for, get a quote for your claim, and begin filing for your credit.

Here at Stenson Tamaddon, we pride ourselves on having assisted many businesses, both large and small, in filing for the Employee Retention Credit. We have experience collaborating with business owners to ensure they receive maximum credit for each calendar year. It’s safe to say that we are confident in what we do and would be proud to be your ERC partner.

The post What is ERC? A Complete Guide to the Employee Retention Credit first appeared on Stentam .

The post What is ERC? A Complete Guide to the Employee Retention Credit appeared first on Stentam .

What is the R&D Tax Credit?

Wed, 13 Jul 2022 00:15:00 GMT

What is Research & Development Tax Credit?

The Research and Development (R&D) tax credit, also known as Research and Experimentation (R&E) tax credit is a United States government sponsored tax initiative. It results in a dollar for dollar reduction in a company’s tax liabilities and is one of the best things American businesses can do to reduce their liability tax. Companies can submit documentation to file using the IRS Form 6765. The research and experimentation tax credit was essentially designed as an incentive to make research activities more affordable for businesses, strengthening American innovation.

Where Did the R&D Tax Credit Come From?

Originally, the R&D tax credit was created in the 1980s by U.S. Representative Jack Kemp and U.S. Senator William Roth. It has since expired eight times and been extended fifteen times. It was created for protecting Americans, encouraging investment in development, and increasing research activities along with basic research payments. With the competitiveness of today’s business world, Congress is encouraging businesses to increase their research activities; they do want to increase economic growth after all.

In the past, the Alternative Minimum Tax (AMT) actually did prevent businesses from being able to file. Then Congress passed the Tax Cuts and Jobs Act of 2017 (TCJA) which reduced the corporate tax rate, thus increasing the value of R&D tax credit.

The Tax Cut and Jobs Act (TCJA) was created to help lower business’ tax rates. They created the R&D tax credit and made it permanent while eliminating other corporate tax credits. As a result of the TCJA, there were changes in tax deductions beginning at the end of December 2021. Before the TCJA was created, companies had to reduce regular credit to 20% of Qualified Restoration Expenditures (QRE) to 13% of QRE spending or be forced to have reduced credit on alternative simplified credit. If you’re interested in learning more, the IRS has created specific guidelines for businesses to file for research and development tax credit in Internal Revenue Code (IRC) Section 41 and Section 174.

How Do You Qualify for the R&D Tax Credit?

Many businesses are not aware if they actually meet eligibility qualifications. Some believe there are special rules needed to qualify. While the correct documentation is required, in reality, over 60 industries can qualify for R&D credit in over 30 states, to offset tax liabilities. Some businesses’ daily operations can even qualify them, allowing them to receive basic research credit if it puts them over a certain base amount. Even start-ups can use this to their advantage.

Here are some of the factors small businesses and large businesses alike must be doing to qualify:

Create new or innovative products
Change existing products
Create new processes, techniques, prototypes, or software development
Hire engineers and designers for internal use or contract research to complete the job

There’s also an IRC section defining a four-part test to determine if a business is eligible for tax cuts and credit:

1) Qualified purposes – The purpose of business development has to either be creating new or improved business operations. It does not need to be something completely innovative.

2) Elimination of uncertainty – Companies must prove that they have tried to eliminate uncertainty when developing or improving products. Contract research expenditures in connection with the taxpayer’s trade can be deducted if uncertainty can be eliminated.

3) Process of experimentation – The company must prove its methods of process such as trial and error or simulation when attempting to reach a certain result in development. Oftentimes some of these processes involve computer software development and engineering.

4) Technological in nature – The experimentation must be related to the hard sciences such as physics, biological sciences, engineering, biology, or chemistry. But, the company is not required to expand upon these principles.

Creating or innovative new products or processes are known as qualified research activities, according to the IRS. The amounts incurred or paid during the research activities such as employee wages and supply costs are known as qualified research expenses. By increasing basic research activities in your business, you should qualify to file for the research and development tax credit and can receive regular credit or basic research credit.

What Should You Pay Attention To?

To file, you must claim some of the credit as a payroll tax credit against the employer section of your social security taxes. It is calculated based on the increases in research expenditures and activities. Small businesses can even use R&D credit to offset payroll taxes of a current tax year if their expenditures are greater than a certain base amount. Companies can no longer expense costs identified as IRC Section 174 research expenses. Instead, these expenses are charged to a capital account and deducted over 5-years.

The best way to calculate your R&D tax credit is by multiplying the fixed base percentage by the average of the business’ gross receipts from the last several tax years. Gross receipts are the total amounts of sales a business has, without eliminating expenses or costs.

When filing, there are two standard efforts to keep in mind: the Regular Research Credit (RRC) and the alternative simplified credit (ASC). The ASC tends to be the most favored of the two as it is simpler. The RRC method is better for businesses with a low base amount, including startups while the ASC method is better for companies with higher base amounts or who have complications with mergers and acquisitions. Keep in mind – you can decide between the two ways when filing in the current year, but be sure to submit the correct documentation to get your R&D credit.

Why Is Working With Us the Best Way to File?

It’s normal to have questions when filing for Research and Development, also known as research and experimentation tax credit, especially when tax hikes are in full swing. In fact, oftentimes businesses will file with the incorrect documentation. If you have any questions regarding the correct documentation, we would be happy to provide you with a documentation checklist.

Partnering with Stenson Tamaddon is important when filing for R&D tax credit to ensure all is done to keep you in compliance and maximize your overall return – and that’s why we’re here! We’ll take a look at your expenditures, base amount, tax rate, contract research, and gross receipts in all open tax years to determine how much credit you qualify for so that your business is able to receive its basic research credit. All records are kept for our internal use only.

The post What is the R&D Tax Credit? first appeared on Stentam .

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What is an Aggregated Large Employer?

Mon, 20 Jun 2022 20:38:00 GMT

An Aggregated Large Employer refers to a group of affiliated entities that are under common control.For example, a parent and subsidiary, or common ownership of multiple companies. This is important for the Employee Retention Credit (ERC) because company size matters. In order to claim the credits in 2020, companies need to have under 100 full-time employees. For 2021, employers with up to 500 full-time employees qualify. The number of part-time employees does not count towards this total. However, when groupings of employers are involved, clarification is needed, so we’ve prepared this guide to help our customers determine whether they may be able to qualify for the ERC.

Which related employers are aggregated employers for purposes of the Employee Retention Credit?

Under the IRS section 52 rules, corporate taxpayers may be required to aggregate as a parent-subsidiary controlled group, a brother-sister controlled group, or a combined group of corporations. Section 52(a) of the Code describes a parent-subsidiary controlled group of corporations, generally, as one or more chains of corporations where the common parent owner/corporation owns more than 50 percent. Under this rule, entities are considered a single employer if they are under common control applying rules similar to the parent-subsidiary or brother/sister controlled group rules or the rules for a combined group of corporations.

What is the impact of the aggregation rules that treat related entities as a single employer?

All entities that are members of a controlled group of corporations or a group of entities under common control
under section 52(a) or (b) of the Internal Revenue Code (the “Code”) rules are considered a single employer for
purposes of the application of the Employee Retention Credit rules. As a result, these employers must be aggregated for purposes of the following rules applicable to the Employee Retention Credit:

As you can see, the rules get complicated when it comes to determining the sizes of employers that can qualify for Employee Retention Credits. Our team of payroll and tax professionals has decades of experience with these types of issues, and we can help you determine if your business can qualify. Reach out to us for assistance with your ERC claim!

The post What is an Aggregated Large Employer? appeared first on ERC Specialists .

Do the business owners’ wages qualify for ERC?

Mon, 20 Jun 2022 19:55:00 GMT

As we speak with hundreds of business owners every day, we often get asked whether their wages can qualify for Employee Retention Credits. Many small business owners pay themselves W-2 wages, and their wages are included in the payroll reports we gather as a part of our filing process. However, we exclude these wages because if they own 51% or more, owners’ wages (and the wages of their relatives) do not qualify for the ERC credit.

If someone owns 50% and has a 50% business partner and they are NOT related, in that case, their wages can qualify for the ERC credit. One exception to this rule is constructive ownership due to the business partners being related. A business owner may only own 50% or less and still not qualify for the ERC credit.

Example 1: If the business is owned 50% by the son & 50% by the father – both partners are considered 100% constructive owners because they are related. So in this case their wages and their relatives’ wages would not qualify for the ERC credit.

Example 2: If a company has 3 business partners and they’re all brothers – then they are all considered 100% constructive owners due to being related and their wages don’t qualify for the ERC credit.

Additionally, the wages of people related to business owners cannot be used for ERC credits. Wages paid to employees with the following relationships to a majority owner (or constructive majority owners) of a corporation or of a partnership or other entity are not qualified wages:

(A) A child or a descendant of a child.

(B) A brother, sister, stepbrother, or stepsister.

(C)The father or mother, or an ancestor of either.

(D)A stepfather or stepmother.

(E) A niece or nephew.

(F) An aunt or uncle.

(G) A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.

(H) An individual who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.

We know that these rules can be disappointing for people who employ family members. Here at ERC Specialists, we are careful to follow the rules outlined by the IRS for claiming the Employee Retention Credit. We look forward to the opportunity to serve you and your business with excellence.

The post Do the business owners’ wages qualify for ERC? appeared first on ERC Specialists .

The Good, the Bad and the Ugly with the Employee Retention Credit

Thu, 02 Jun 2022 08:18:00 GMT

The good news is that the Employee Retention Credit (ERC) remains available for employers to claim on amended payroll tax returns for qualifying periods, assuming that the businesses meet the eligibility criteria and paid eligible wages during those times. Depending on the year, the legislative construct allowed for employers who experienced a significant decline in gross receipts or who were subject to either a full or partial suspension by a government order to claim a credit on eligible wages up to a maximum amount of either $5,000 per employee in 2020 or $7,000 per employee per quarter for the first three quarters of 2021. This remains available to employers to claim by amending their payroll tax returns for three years after the original filing deadline. Because of this, employers can rest easy knowing that there is still time to amend those returns to capture the credit. In order to do so, key considerations MUST be made as part of the decision, and these considerations MUST be documented in order to protect and potentially defend the claim in the event of an IRS audit. Those considerations include, but are not limited to:

The bad news with the ERC starts with the fact that there is still limited guidance on how a business can prove that it falls into the safe harbor of partial suspension of operations of at least 10%. The IRS is taking at least 9 to 12 months, or longer in some cases, to process amended 941X forms and to issue refunds. There seems to be no working around the fact that Federal income tax returns will need to be amended to add back the credit to the wage expense in the year the credit was generated, rather than in the year the credit was claimed and/or received. And lastly, although employers have three years to amend returns to claim the credit, the IRS has FIVE years to audit and potentially disallow the refund. At that time, if it is determined that the employer is ineligible for the credit, they will need to repay the credited amount, plus penalties and interest.

The “ugly” is with respect to the bad actors that appear to be plaguing the business incentives space. Many vendors are approaching organizations suggesting that the ERC represents “easy money” that “everyone is entitled to claim” without consideration for eligibility, an evaluation for wages paid as a large employer, or an acknowledgment of recent IRS Notices and Revenue Procedures. These actors may not have the ability to appear before the IRS, may not retain documentation to support the credit, and may not have prepared the credit while taking into account the risk of an uncertain tax position needing to be reported in the financial statements of an organization.

CLA’s national team of subject matter experts can assist your organization with the good, the bad and the ugly of the ERC. Schedule a consultation with Jennifer Rohen , our Business Incentives Consulting Practice Leader, today!

10 Frequently Asked Questions about the ERC

Mon, 16 May 2022 15:21:00 GMT

The Coronavirus pandemic brought a myriad of changes to how businesses operate, and with that came legislation that made changes to the tax code and the credits available to businesses. One of those acts is the “ Consolidated Appropriations Act, 2021 ” (“CAA”), which created a path for relief for a variety of businesses, health care service providers, and other entities impacted by the pandemic. One such opportunity afforded to qualified businesses is the Employee Retention Credit (“ERC”). Originally created as part of the CARES Act and strengthened as part of the CAA, the ERC still has many nuances that can be difficult for employers to navigate. In this blog, we answer some of the most frequently asked questions about this valuable credit.

From there, you’ll get a better understanding of what funds your organization will qualify for. Here at ERC Specialists, we’re passionate about helping small businesses navigate these difficult times and stressful processes. Contact our team for individualized help with the Employee Retention Credit, we’re here to help!

The post 10 Frequently Asked Questions about the ERC appeared first on ERC Specialists .

Should You File for the Employee Retention Credit?

Mon, 09 May 2022 20:23:00 GMT

As businesses of all sizes and in all industries became directly or indirectly affected by regulations and shutdowns caused by the COVID-19 pandemic and the resulting economic downturn, it became clear that U.S. companies needed significant financial assistance to remain open.

The federal government authorized billions of dollars in aid specifically for businesses through the Employee Retention Credit (ERC) within the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). A refundable employment tax credit for eligible employers based on qualified wages and health plan expenses, the ERC allowed employers to use the funds to continue to pay existing employees and keep business running and staff working during the economic fallout caused by the Coronavirus.

Employers have been working hard to stay afloat during the pandemic. They simply don’t have the bandwidth to manage a constantly shifting business operations environments, learn and adhere to local, state and federal regulations and discover the ins and outs of the ERC to see if they are eligible. There are millions of unclaimed dollars available and nearly any company impacted by the pandemic is eligible to claim their credit. Businesses need to take advantage of this opportunity before funds run out, or the three-year claims window closes.

5 Reasons to Apply

In addition to the ERC, the federal government has introduced other credits designed to help businesses weather the long-term effects of the pandemic and to encourage both innovation and the employment of American workers. Companies should talk with their tax preparers about these additional credits available to them including the Research & Development (R&D) tax credit, available to companies developing new or improved business components, and the PPP forgivable loan program, also established during the CARES Act and implemented and backed by the Small Business Administration.

Jay Woods is founder and President of Omega Accounting Solutions, responsible for the company’s business development and strategic planning. With 20 years of experience in financial management, business leadership, and corporate strategy, Woods’ focus is on building long-term strategic partnerships with clients and helping small business owners access a full-functioning accounting department. For more information about qualifying for the ERC and receiving a free evaluation from Omega Accounting Solutions, contact us today .

The post Should You File for the Employee Retention Credit? appeared first on Omega Accounting Solutions .

5 Reasons Nonprofits Should Apply for Employee Retention Credit

Mon, 09 May 2022 18:36:00 GMT

The Benefits of ERC for Nonprofits and Churches

By Carlos Rios

As the COVID-19 pandemic ramped up, thousands of businesses underwent mandated shutdowns and were impacted financially, so the U.S. government passed legislation authorizing billions of dollars in economic relief to employers. The Employee Retention Credit (ERC) was one of the government tax incentives passed to encourage eligible employers to continue paying employees and keep their businesses running during the economic fallout of the coronavirus.

What many don’t realize is that this financial aid was intended for almost any organization with employees — including tax-exempt nonprofit organizations, like private hospitals, museums, churches, private schools, universities and credit unions.

Are Nonprofits Eligible for the Employee Retention Credit?

Many nonprofits are eligible for the Employee Retention Credit. Most nonprofit organizations that were impacted by the pandemic may qualify for the ERC, even if they are not subject to federal payroll taxes. Tax Exempt Organizations (TEOs) such as churches, museums, and charitable hospitals may also be eligible for ERC credits against Social Security and Medicare taxes paid in 2020 and/or 2021.

Unfortunately, many nonprofit organizations that qualify for these potentially valuable payroll tax credits didn’t claim them against their 2020 and 2021 payroll taxes. The good news is that the funds are still available. Here are five reasons your nonprofit should apply now for the Employee Retention Credit .

5 Reasons Nonprofit Organizations Should Apply for ERC

1. Most Nonprofits May Qualify

To qualify for the ERC, a nonprofit must meet one of the following:

2. Nonprofits May Receive up to $26,000 Per Employee

The financial benefit of the ERC is directly relative to the size of the company. A logistics company from Chicago, Illinois with 85 employees received a $1.6 million ERC refund. An electrical contractor from Bryan, Texas with 130 employees qualified for a $2.6 million ERC refund check. Most nonprofits, no matter how small, may qualify for a considerable tax refund.

3. It’s Retroactive

Though last year’s Infrastructure Investment and Jobs Act moved up the ERC’s expiration date, effectively repealing the program for the fourth quarter of 2021, nonprofit organizations are still allowed to submit their payroll tax filings for the covered periods. Employers who filed their payroll taxes in 2020 could deduct the money directly from their quarterly payroll taxes at that time. Those that didn’t file in 2020 or are claiming the ERC for the first time on their payroll taxes in 2021 — or retroactively for 2020 — will be refunded for quarterly filed periods.

4. It’s a Cash Refund

The ERC is a federal credit taken on a business’ quarterly payroll taxes, not the business’ taxes, based on how many full-time employees (30-plus hours) the company had for the eligibility period. The credit calculation is based on qualified wages paid per employee each quarter. In 2020 the refundable tax credit was 50% of qualified wages up to a $5,000 maximum. In 2021 it was 70% of qualified wages up to $21,000. The IRS issues a refund check in the amount of the credit claimed.

5. It’s Easier Than You Think

If a nonprofit organization meets the eligibility requirements for the ERC, the credit can be claimed by filing amended payroll tax returns via Form 941-X (pdf) for the qualifying quarters and submitting them to the IRS. This retroactive filing option is good for three years from the date of filing or until the program runs out of money.

ERC specialists working for accounting companies, in accounting departments and for tax preparers can quickly evaluate whether a nonprofit organization is entitled to the credit and provide any needed guidance.

In addition to the ERC, the federal government has introduced other credits designed to help nonprofit businesses weather the long-term effects of the pandemic and to encourage both innovation and the employment of American workers. Employers should talk with their tax preparers about additional credits available to them including the Research & Development (R&D) tax credit , available to nonprofit companies developing new or improved business components.

The post 5 Reasons Nonprofits Should Apply for Employee Retention Credit appeared first on Omega Accounting Solutions .

Do I need to pay income taxes on ERC funds?

Mon, 02 May 2022 13:58:00 GMT

When you receive your ERC funds, you will need to let your CPA or tax preparer know about this. These funds are not taxed as gross income, but it does reduce your payroll expenses. We suggest that you wait until you receive your refund and know your final total received, as well as the amount of interest the IRS paid out on top of the refund. Then let your tax preparer process the associated income tax returns. Each client’s taxes have a very different situation (ie: cash basis, accrual basis, loss/profits). This is why we can’t give advice on your personal business’s income tax situation. It will be important for you to have this discussion with your tax professional, once the final amounts are received.

Here is information directly from the IRS website :
Does an Eligible Employer receiving an Employee Retention Credit for qualified wages need to include any portion of the credit in income?

No. An employer receiving a tax credit for qualified wages, including allocable qualified health plan expenses, does not include the credit in gross income for federal income tax purposes. Neither the portion of the credit that reduces the employer’s applicable employment taxes, nor the refundable portion of the credit, is included in the employer’s gross income.
Does the Employee Retention Credit reduce the expenses that an Eligible Employer could otherwise deduct on its federal income tax return?
Yes. Section 2301(e) of the CARES Act provides that rules similar to section 280C(a) of the Internal Revenue Code (the “Code”) shall apply for purposes of applying the Employee Retention Credit. Section 280C(a) of the Code generally disallows a deduction for the portion of wages paid equal to the sum of certain credits determined for the taxable year. Accordingly, a similar deduction disallowance would apply under the Employee Retention Credit, such that an employer’s aggregate deductions would be reduced by the amount of the credit as result of this disallowance rule.

The post Do I need to pay income taxes on ERC funds? appeared first on ERC Specialists .

The Employee Retention Credit for Construction Companies

Fri, 22 Apr 2022 20:10:00 GMT

During the COVID-19 pandemic a variety of businesses have been impacted leading to many temporary closures and in the worst cases, permanent ones as well. One business significantly impacted by the pandemic is the construction industry. Through increases in costs, issues stemming from government shutdowns, and supply chain shortages, it was nearly impossible not to be affected. One way for companies to alleviate the financial pressure of the pandemic is through the Employee Retention Credit (ERC). Thankfully the parameters to qualify for the Employee Retention Credit make it simple for construction companies to qualify.

While most firms focus on the first two ways to qualify for ERC funds: revenue reduction and government shutdowns, there is a third way. The Internal Revenue Service (IRS) has guidelines for a third way that involves the impact of supply chains on your business. The disruption must have had a “more than nominal” effect on your business and it must have been the result of a government order. For this qualification, a more than nominal portion of the company’s operations must have been affected amounting to more than 10% of revenue for a given quarter. Another way to qualify, as it relates to supply chain shortages, is that the affected portion of the business represented 10% or more of the total company activities in quarters in 2020 and 2021 compared to 2019.

During the last two years, as a result of COVID-19, supply chains were impacted in an extreme way never seen before, and many of these disruptions continue to this day. Third-party vendors experienced shortages for materials essential to keeping the construction industry going, such as lumber and steel. For those in the sector, orders for basic building materials have been backlogged for months at a time. In addition to backordering supplies, prices have spiked significantly as well creating rapid inflation. This strain has increased the lead time of projects, leaving those in the construction industry rightfully concerned for the future of their businesses.

With rising inflation and an uncertain market ahead, seeing so many eligible companies miss out on such a valuable resource is disheartening. We here at ERC Specialists are shattering the misconceptions around the Employee Retention Credit, as many firms have been misled by outdated guidelines. The reality of the situation is that these shortages can significantly benefit your business because they can qualify you for the ERC. Even if your company could make up the difference from the increased costs through the pandemic, Congress is still encouraging businesses to claim the credits. If your company had W-2 employees in 2020 and 2021, you can qualify if you experienced impacts to your operations because your third-party vendors experienced supply shortages due to government-ordered shutdowns.

The National Association of Homebuilders (NAHB) stated that in 2021, more than 90% of builders reported materials shortages and noteworthy delays. Lumber experienced the greatest increase in cost, with prices rising nearly doubling from 2019 to 2021. Other items like steel, electrical supplies, and lighting equipment have each had shortages or backlogs. These shortages no doubt had a large impact on the construction industry, with smaller businesses being affected even more. If your company underwent hardships due to issues like those above, it is highly likely that you will qualify for the ERC.

With all of the complexity involved in the language associated with the ERC, rule changes, and eligibility requirements, it is important for construction companies to work with certified payroll tax experts who have a focus on the ERC and are dedicated to helping businesses like yours to receive the maximum credit possible. ERC Specialists is here to help guide you through the process while ensuring that the integrity of your financial statements is protected. Want to find out if you qualify? Contact one of our affiliates today or qualify online at www.ercspecialists.com .

The post The Employee Retention Credit for Construction Companies appeared first on ERC Specialists .

The 5-Step Process to Qualify for ERC Funds with ERC Specialists

Fri, 22 Apr 2022 20:00:00 GMT

As a business owner, you know all too well how challenging the COVID pandemic has been. Through emergency government orders, businesses have been forced to restrict or completely shut down during the pandemic. To keep the economy intact in such a challenging situation, the government has released several programs aimed at supporting those businesses negatively impacted by the pandemic. A significant program introduced in March of 2020 was the Employee Retention Credit.

If your business qualifies, the ERC program allows for up to $26,000 per employee. This means a company with 10 employees can receive up to $260,000 in ERC funds. It’s important to note that this program does not have a cap on funding. Although this program was released at the same time as the PPP funding, it has been poorly utilized nationwide. This is because originally it provided much less funding and restricted qualification to a few businesses. But we have good news! This program has expanded with the most recent amendment being signed into law in November 2021. Now the rules for qualification have been significantly eased. Here at ERC Specialists, our team of over 200 tax and payroll professionals is focused on helping U.S. small business owners claim their Employee Retention Credits. We prepare and file your claim using this five-step process:

Step One: visit our website at www.ERCSpecialists.com. Click ‘Begin Qualifying’ to input your business information into our system and determine whether or not you qualify. If we feel you are a good candidate for the program, we’ll give you an estimate of how much you can receive in ERC credits.

Step Two is when you send us some of your payroll tax documents via our secure file transfer system. We need your 941 payroll tax returns, detailed payroll reports for 2020 and 2021, and basic information on any PPP funding you may have received.

Step Three: we evaluate and analyze the information you provided. We will find the maximum allowable credit that we can get back for you and provide an analysis, usually within two to three weeks.

Step Four, we send you a document containing the final amount of your credit along with forms to sign to allow us to file for the ERC credits on your behalf. Once you sign them, we will file your ERC application with the IRS and communicate with the IRS as needed to ensure you receive your full credit.

Step Five, you’re done. Sit back and relax. The IRS will process your return and issue your refund checks. You’ll receive one check for each quarter claimed, since the IRS processes the return for each quarter separately. Unlike the PPP these funds don’t need to be paid back, and the money can be used for any purpose. Take it from Scott, one of the business owners we were able to help: “When I heard about the ERC program I reached out to my CPA. 30 minutes later he called and said I didn’t qualify. Out of curiosity, I had ERC Specialists see if I qualified. Turns out I received the ERC for 7 of my 9 employees. Highly recommended!”

Don’t delay! The IRS is taking four to six months to process these returns. And as this ERC credit has become available for more businesses, this backlog may increase. Ready to get started? Visit www.ERCSpecialists.com to see if you qualify today. We look forward to helping you maximize these valuable credits!

The post The 5-Step Process to Qualify for ERC Funds with ERC Specialists appeared first on ERC Specialists .

Do I have to have experienced a loss of revenue to get the ERC?

Fri, 22 Apr 2022 19:47:00 GMT

Originally when the ERC was just being implemented, it was difficult as well as overly complicated for small businesses to apply and have their qualifications accepted. However, recent changes have resulted in a significant shift in the application process. Now Employee Retention Credits are available to businesses with under 500 employees based on the total wages paid to W-2 employees.

Navigating the world of Employee Retention Credit (ERC) can be a daunting task for business owners to determine if they qualify for the credit. In many cases, the language used can be confusing. Our team here at ERC Specialists focuses on helping businesses substantiate the pandemic’s impacts to fulfill the complicated task of qualifying for the credit. The technical jargon associated with IRS regulations can result in the false idea that the only way to prepare is if the firm has experienced a loss in revenue. This is simply not the case as there are three ways to qualify based on the following criteria: revenue reduction, supply chain distributions, and partial or complete shutdown.

The first way to substantiate your qualification is through the reduction of revenue. Out of the three qualifiers, loss of revenue is the one in which most business owners are familiar with. For 2020, your firm must have experienced a 50% reduction of gross sales in at least one quarter for quarters two, three, and four of the year as the COVID-19 pandemic began in the second quarter of 2020. When and if the revenue reduction in 2020 returns to 80% of the 2019 level, the qualification ends. Regarding 2021, you could qualify if you had a 20% reduction of gross sales for each quarter 1, 2, and 3 compared to the same quarter in 2019.

Supply chain disruptions are another way your business can qualify. Businesses that rely on third-party sources, such as vendors and suppliers, for their companies to function can take this route to qualify. The qualification must have resulted from a government suspension order that impacted your suppliers, resulting in the third party not being able to deliver crucial goods or components. An example of this would be restaurants that could not obtain certain products such as meats, produce, or even paper plates during the pandemic. Another qualifying instance would be construction firms that could not receive windows due to the closure and delay at ports. These impacts qualify a company, regardless of revenue gain or loss.

The third option to qualify involves your business has experienced a partial or full shutdown. This qualification is based on a “suspension test” to demonstrate that your operations were partially or fully suspended due to a COVID-19 governmental order. For this option, it’s essential to know that a government restriction may have directly impacted your operations, even if that shutdown order wasn’t given to you directly. Trade shows were canceled due to government orders, making it impossible for all types of businesses to meet and obtain new customers. For example, a cleaning service used to earn most of its revenue by disinfecting restaurants and office buildings, which was no longer possible during the mandated shutdowns. The cumulative effect of the full or partial suspensions needs to have had a more than nominal, meaning more than a 10% impact on your business’s bottom line when considering the gross receipts of that portion of your business in 2019. This does not mean that your revenue must have decreased to use this qualification.

So now you know! There are more ways to qualify than through revenue reduction alone. Want to find out if your business qualifies for ERC credits? Fill out our Qualification Form to get the process started and reach out to the person who introduced you to ERC Specialists for more help. Our team stands ready to help your company obtain these valuable credits!

The post Do I have to have experienced a loss of revenue to get the ERC? appeared first on ERC Specialists .

Financial Relief Opportunities Still Available to Businesses Impacted by the COVID-19 Pandemic

Sun, 10 Apr 2022 23:57:00 GMT

Over two years ago, the first round of economic relief became available to employers and employees suffering from the consequences of the COVID-19 pandemic. In the twenty-four months that followed, multiple laws were enacted and much regulatory guidance was published. Questions remain unanswered, and businesses are trying to navigate what relief may still be available, as well as what reporting and audit requirements still remain.

Payroll dollars used to compensate employees in 2020 and 2021 are the key to unlocking savings and enhancing value in these programs. Look at payroll as a commodity, along with the investment in your workforce and accounting of that money, to drive the total benefit.

Amend your tax return to claim FFCRA credits

The Families First Coronavirus Response Act (FFCRA) required employers with fewer than 500 employees to pay wages to employees who were quarantining under doctor’s orders or who were caring for a dependent or a member of their household that was impacted by COVID-19.

For employers who paid emergency paid sick leave and emergency family medical leave wages to eligible employees, a dollar-for-dollar credit was provided, with some limits, through the end of 2020. Legislation that followed, including the Consolidated Appropriations Act, 2021 (CAA) and the American Rescue Plan Act of 2021, extended the availability of the credit without extending the obligation for employers to pay.

Employers who paid these wages from March 2020 through the third quarter of 2021 may still amend their payroll tax returns to claim the credit. The deadline to file the claim is three years from the original due date of the return. These credits must be claimed as income in the year for which the credit was generated.

Reconsider eligible expenses for PPP loans

The CARES Act provided a low-interest, potentially forgivable payroll loan to employers who met certain criteria, and the CAA provided a second round of payroll funding to employers who retained employees and incurred certain costs to remain in business. The Small Business Administration regulated this program heavily, from the application for funds and borrower eligibility criteria to the forgiveness considerations.

Although the funds allocated to this program are exhausted, several employers who have not yet completed the forgiveness application and process should consider the expanded list of eligible expenses outside of payroll. To enhance other economic relief programs created by the legislation, include all possible non-payroll costs in the forgiveness application.

Amend your return to claim ERC and watch for future expansion

In 2020, businesses could qualify for the Employee Retention Credit (ERC) with a significant decline in gross receipts, or a full or partial suspension of operations due to a government order. By the end of 2021, businesses could qualify as a recovery start-up business, if the business was started subsequent to February 15, 2020, and had less than an average $1 million in receipts in each of the prior three years (considering aggregation with certain related parties). In the last instance, the credit was capped at $50,000 per quarter.

Similar to FFCRA credits, employers have three years from the deadline of the quarterly returns to amend their payroll tax returns to claim the ERC. If you claim these credits, you must reduce the income tax deduction for payroll expenses by the amount of the credit in the year for which the credit was generated.

Employers are still watching for legislation that would call for the reinstatement of the credit for the fourth quarter of 2021. Should such legislation be enacted, working with your tax advisor to file Forms 941-X may allow you to claim the credit to the extent that eligibility applies.

As of now, many employers are waiting to receive their requested refunds. The IRS has stated that the waiting period can be as long as a year and has asked for patience.

What is the status of RRF, SVOG, and EIDL?

The extra relief provided by the Restaurant Revitalization Fund (RRF), Shuttered Venue Operators Grant (SVOG), and Economic Injury and Disaster Loan (EIDL) programs is no longer available. However, in many cases, EIDL applications are still being processed.

Keep in mind that the funding from these programs do not need to be included in the gross receipts calculation for eligibility determinations for the ERC program. That said, they are still required to be accounted for in the financial statements and tax return filings.

How we can help

As economic relief programs wind down and begin to be reviewed by administrative agencies, new rules will apply to eligibility and reporting situations. Our professionals can help you evaluate your options and help you make informed decisions.

This article first appeared on CLAconnect.com as “Outstanding FAQs: Economic Relief in 2022.” Excellent work as always by our Business Incentives Consulting Practice Leader Jennifer Rohen !

Three Ways to Qualify for ERC Funding

Wed, 30 Mar 2022 22:40:00 GMT

Many people thought they couldn’t get the Employee Retention Credit because when it was first introduced there were tons of restrictions. For example, initially, companies couldn’t claim ERC credits if they’d gotten PPP funding. However, the rules have changed many times, and now that is no longer the case. Employee Retention Credits are available to businesses with under 500 employees, and it’s based on the wages paid to W-2 employees. In addition to company size, businesses must show impacts from the pandemic. The IRS has updated the qualification methods, and we encourage our customers to visit the IRS website for all the details. There are three different ways to qualify for Employee Retention Credits for your business: Revenue Reduction, Supply Chain Disruptions and Full or Partial Suspensions.

The first way is Revenue Reduction. For 2020 you must have experienced a 50% reduction of gross sales for the 2020 quarter as compared to the same quarter in 2019. When and if the revenue reduction in 2020 gets back to 80% of the 2019 level, the qualification ends. For 2021 you can qualify if you had a 20% reduction of gross sales for the 2021 quarter as compared to the same quarter in 2019.

The second method is Supply chain disruption. It’s a common qualification for businesses that rely on vendors and suppliers for their business to function properly. This qualification must have resulted from a government suspension order to your supplier that resulted in the supplier not being able to deliver critical goods but may continue beyond the original suspension order. For example, many restaurants weren’t able to get certain types of meat, paper towels or carryout containers during the pandemic. Delivery companies couldn’t get truck parts or scanners. Hotels were unable to receive furniture, towels and sheets due to ports being shut down, which delayed renovation plans. The impact of the supply chain disruption needs to have created a more than nominal (more than 10%) effect on the business’ operations. These impacts qualify a company regardless of revenue gain or loss.

The third is a partial or full shutdown. This qualification is based on a “suspension test” to demonstrate that your operations were partially or fully suspended due to a Covid-19 governmental order. Keep in mind, a government restriction may have had a direct impact on your operations even though that shutdown order wasn’t given to you directly. For example, an insurance agent used to get all of their business by visiting doctors offices and hospitals, which was no longer possible. Conventions were cancelled due to government orders, making it impossible for all types of businesses to meet and obtain new customers. The cumulative effect of the full or partial suspensions must have had a more than 10% impact on your business operations when considering the gross receipts of that portion of your business in 2019. This does not mean that your revenue must have decreased to use this qualification.

Want to find out if your business qualifies for ERC credits? Fill out our Qualification Form to get the process started, and reach out to the person who introduced you to ERC Specialists for more help. Our team stands ready to help your company obtain these valuable credits!

The post Three Ways to Qualify for ERC Funding appeared first on ERC Specialists .

How the ERC Affects Your Business Taxes

Thu, 24 Mar 2022 18:50:00 GMT

We’re back with another informative article about the Employee Retention Credit (ERC). If you’ve been following our blog series, you know ERC Specialists are the tax experts when it comes to ERC. And our goal is to impart as much wisdom into this complicated process for small businesses as possible.

Today, w e’re discussing how the ERC affects your business taxes, so let’s dive right in.

The ERC tax credits are refundable tax credits against employer-paid Social Security taxes, and they are based on eligible wages that a qualified employer has paid. The maximum credit available to you as a small business is based on which wages are qualified per employee. In order to account for this correctly, many areas of consideration are required.

Obtaining Professional Guidance

If your small business qualifies for the ERC tax credits, you should consider which of the accounting standards should govern the acceptance of the benefits. Ensure you look to the Financial Accounting Standards Board to provide the appropriate guidance as to how to appropriately record the income. Considered a conditional grant, any small business or organization may qualify for the receipt of ERC funding if you are eligible per the IRS guidelines. ERC Specialists, DOES NOT provide any legal or accounting advice and users of this web site should consult with their own lawyer and C.P.A. for legal and accounting advice when it comes to business taxes.

Qualification & Timeframe to Receive ERC Tax Benefits

As we begin our assessment of the tax implication for ERC for small business, there are basically three ways to qualify for ERC funds. This includes 1) a significant decline in gross receipts over the same quarter(s) in 2019, or 2) a supply chain disruption that impacted your business’ ability to obtain critical goods or 3) a partial or full suspension of service delivery due to governmental restrictions related to the COVID-19 pandemic.

Of course, the time your business takes to realize this qualification may depend on which qualifying event your business chooses. For example, your business’ ability to qualify for the funding due to revenue reduction should be assessed based on each quarter, as eligibility depends on the quarter over quarter gross receipts comparison vs 2019.

For your business taxes, you should recognize a funding receivable for the amount not received , even if the forms haven’t yet been filed. In order to accurately account for the revenue and the receivable alike, you must determine if you qualify, and then calculate the credit. In an ideal world, you would also be filing the appropriate forms before you record that funding receivable as well.

If you choose to use the suspension of service delivery instead, the ERC funding is earned as wages are paid in the period in which you suspended services. For your business taxes, the contribution and related funding received should be recorded as the wages are accrued.

Accounting for ERC in Your Business Taxes

The IRS has clearly advised that ERC funding must be a reduction from your expenses, which then increases your taxable income, regardless of your business’s accounting method (e.g. cash vs accrual). Per IRS guidelines, you should amend your business’s tax return in order to reduce the expenses for the ERC funding amount you claim. Before embarking on refiling your tax returns, you should spend some time reviewing the IRS’s guidance issued on Aug. 4, 2021, via IRS Notice 2021-49. Here the IRS addresses the wages question and advises the ERC funding amount will indeed reduce the eligible deductions for qualified wages: They will be taxable in the associated year.

Because of this and so many various complexities, we recommend you seek the advice of a tax professional. Don’t go it alone and risk your business’s compliance. When you file for your ERC credit with ERC Specialists, our payroll tax professionals will provide you with documentation on the credits received for each quarter. You’ll want to give these to your CPA or tax professional so they can help you navigate the ERC process while staying on the right side of the IRS.

The post How the ERC Affects Your Business Taxes appeared first on ERC Specialists .

How Does PPP Funding Affect the ERC?

Thu, 24 Mar 2022 18:36:00 GMT

We’ve touched on it previously , but with so much confusion around eligibility for the Employee Retention Credit (ERC) for businesses that have received Paycheck Protection Program (PPP) funds, we thought the topic deserved its own article.

While the Consolidated Appropriation Act (CAA) has provided much-needed relief, it has also created a more complex situation for small business owners who received PPP loans. As we’ve covered, you may be eligible for ERC tax benefits, even if you received PPP funds. However, we highly recommend getting expert tax advice so your business can be fully forgiven for the PPP loan and receive the maximum tax credits through ERC. Let’s explore how PPP funding affects the ERC.

And if you’ve been following our ERC blog series, you know by now it’s complicated.

While small business owners may qualify for the ERC even if you received a PPP loan, you can’t claim the ERC on PPP employee wages that were used to seek PPP loan forgiveness. The IRS considers this double dipping, and you don’t want to get caught with your hand in that cookie jar.

Maximizing Your ERC and PPP Funding

When your small business is looking to maximize both ERC and PPP benefits, you need to tread carefully. First, you must complete a PPP loan forgiveness application. You may either use the 8- or the 24- week period that is covered to analyze it for the most PPP forgiveness as well as the ERC tax credits, without using the same wages for both.

When you report wages that are necessary on your PPP loan forgiveness application, it’s different than deciding to not use ERC wages. Small businesses may list wages on the application that are more than the minimum needed to receive loan forgiveness. The IRS is aware of this, so it enables small businesses to limit the amount of wages for the ERC opt-out option to equal the minimum amount necessary to receive PPP loan forgiveness based on expenses listed in the application. You still with us?

Let’s keep going. Now, the minimum amount of payroll costs that is necessary must be 60% of the entire loan amount combined with all other qualified expenses. That number is documented on the PPP loan forgiveness application. The minimum amount of payroll expenses is equal to the entire amount of the PPP loan. Therefore, it is critically important to ensure all eligible non-payroll costs are included with your PPP forgiveness application.

Additional Considerations When Maximizing Both ERC and PPP Funding

For small businesses that qualify for ERC in at least two consecutive quarters of a PPP-covered period, we recommend looking at the 24-week coverage period. If you do choose to move forward with this, we highly advise you take advantage of all non-payroll costs available. These include rent, utilities, mortgage interest and more. You do this in order to increase the amount of payroll costs that are on the PPP loan forgiveness application so you can use them for ERC during both quarters.

This means that wages that are PPP-limited for those employees who make more than $100,000 are eligible for calculation into ERC. For example, employers who provided health insurance are eligible for both ERC and PPP funds.

In addition, small business owners should review qualified wages that are not paid via a PPP-covered period to determine if they may qualify for ERC. Recently, the IRS issued additional guidance that states that PPP loan forgiveness did not need to be included in the gross receipts evaluation in order to see if the business met the required 50% or 20% reduction in 2020 or 2021, respectively, to qualify.

It is also worthwhile to note the Infrastructure Bill passed by the Senate in August 2021 includes a provision that ended ERC eligibility for many employers effective Sept. 30, 2021. This may impact the evaluation of which period you select as your PPP-covered period, as PPP wages that were paid after Sept. 30, 2021, may still qualify.

Remember, you don’t need to navigate these troubled waters alone. And you don’t have to figure all of this out yourself. When you qualify through ERC Specialists and provide us with your information, our team of experts will analyze both your PPP information and your payroll information to ensure you get the maximum ERC credits. Contact us today to get the expert payroll tax advice you need to stay protected and receive the most funding from these important federal programs.

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The ERC for Nonprofit Organizations

Thu, 24 Mar 2022 18:27:00 GMT

Are you a nonprofit organization that has been financially impacted by the COVID-19 pandemic? Look no further to get your questions answered about the Employee Retention Credit (ERC). At ERC Specialists, we’re the payroll tax experts you need to navigate the complex world of ERC. You already have limited resources as a nonprofit, and your work is essential. We want to help you get the maximum ERC tax benefits available for you to continue the selfless work you do each day.

What is the ERC for Nonprofits?

The Coronavirus Aid, Relief and Economic Security (CARES) Act was developed to incentivize organizations to maintain their employees on payroll during the pandemic. It created ERC, a refundable payroll tax credit that can be claimed against the employer’s portion of the Social Security and Medicare taxes. In 2021, the Consolidated Appropriations Act (CAA) extended the ERC program through Q1,Q2 and Q3 of 2021, giving you even more opportunities for financial recovery.

Does My Non Profit Qualify for ERC Funds?

Your organization may qualify for ERC if you experienced either of these two scenarios.

With option 1, for the purpose of determining whether you qualify for ERC funds, you should analyze gross receipts from all operations, not just those from activities that are unrelated trades or businesses.

For option 2, you may qualify simply if your organization’s activities were fully or partially suspended during a calendar quarter in the program timeframe.

For example, you may offer activities in venues that were closed during the pandemic. Or you may have had limited on-site meetings. Or perhaps you experienced supply chain delays or interruptions resulting from these types of orders being placed on partners or distributors.

In addition, for 2020 wages paid, employers averaging more than 100 FTEs during 2019 can claim the ERC for wages paid to employees for the period they aren’t providing services only. For 2021 wages paid, this restriction applies only to employers who averaged 500 or more FTEs in 2019.

How Does the ERC Work in Conjunction with a PPP Loan?

Great news! This ERC funding may be claimed by any eligible employer, which includes tax-exempt nonprofit organizations — even if you previously received a Paycheck Protection Program (PPP) loan.

While many qualified employers received a PPP loan vs claiming ERC, now is the time you can capitalize on modifications that enable you to receive the funds. If you received a PPP loan and have applied for loan forgiveness, the wages involved will reduce your eligibility for ERC.

However, if you received a PPP loan and haven’t applied for loan forgiveness, you should claim all qualifying non payroll costs such as rent, utilities, mortgage interest, etc. in the application to make sure the maximum amount of qualified wages will be counted toward ERC.

How Much ERC Funding Can My Non Profit Organization Qualify For?

For 2020, the ERC equals 50% of the qualified wages, which also includes employer-paid health care, that an eligible employer pays in a quarter. The maximum amount of wages in 2020 per employee in any quarter is $10,000. This means the maximum ERC credit for those wages is $5,000.

In 2021, the ERC equals 70% of the qualified wages, and health care costs up to $10,000 per quarter. The maximum wages in 2021 per employee in any quarter is $7,000. Because only Q1, Q2 and Q3 are eligible, the maximum total credit per employee in 2021 equals $21,000..

Refiling your 2020 and 2021 941 Payroll Tax Returns

Of course, returns for 2020 have already been filed, and the taxes paid, so you will need to amend your tax returns according to the quarter (or quarters) in which the qualifying wages were paid in order to claim your ERC funds. Use IRS Form 941X.

With so much complexity involved in the ERC language, modifications and eligibility requirements, it is important that non profit organizations work with certified payroll tax experts like ERC Specialists to maximize your ERC funding while protecting the integrity of your financial statements. Contact us today to get started!

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Securing Federal PPP and ERC Funds

Sat, 12 Mar 2022 01:59:00 GMT

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Qualifying for COVID-19 Credit

Mon, 28 Feb 2022 21:11:00 GMT

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The Changes Due to the Consolidated Appropriation Act of 2021

Mon, 21 Feb 2022 21:52:00 GMT

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How to Get Your Business the COVID Relief It Deserves

Mon, 21 Feb 2022 21:51:00 GMT

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The Employee Retention Credit

Mon, 21 Feb 2022 21:43:00 GMT

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Did the ERC Credit End in September 2021?

Tue, 08 Feb 2022 20:28:00 GMT

Have questions about the Employee Retention Tax Credit? You’re not alone. Though the program has been around for a while now, its complexity hasn’t changed. And for business owners, every new iteration of rules, guidance and announcements brings more questions and confusion. But never fear, ERC Specialists is here to help you unravel and interpret it all!

One of the most frequent questions we get is: Did the ERC credit end in September 2021?

Let’s discuss the program end date as well as the steps you can take now to ensure you receive the most tax benefits available to you.

ERC Tax Credit Program Ends, Now What?

While the ERC program ended September 30, 2021, you can still submit and apply for credits for up to three years after when your IRS Form 941s were filed. That’s right, eligible businesses can still apply for stimulus funds based on your financials between March 13, 2020 and Sept. 30, 2021.

That’s great news for many small business owners who are still struggling to get their full ERC benefits.

While there are many nuances involved in the program, we encourage every business to evaluate the opportunities available to them. However, many small business owners still don’t understand those nuances and may be hesitant to take on such a complex program.

That’s a mistake that leaves money on the table. ERC Specialists is here to help ensure you don’t miss out on your share of the ERC tax benefits you deserve.

History of the ERC Tax Credit

The Employee Retention Tax Credit (ERC) was created by the Coronavirus Aid, Relief and Economic Security (CARES) Act and became law in March 2020. The goal of the program is about the only thing that’s clear to many business owners: To encourage small businesses to retain employees during the pandemic. Simple! And wise. But there’s more.

The Consolidated Appropriations Act of 2021, which was enacted in December 2020, and the American Rescue Plan Act (ARPA), enacted in March 2021, amended and extended the ERC tax credit as well as the opportunity to receive some advance payments through the end of the year 2021.

On Nov. 15, 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act into law, and the Employee Retention Credit end date was switched from Dec. 31 to Sept. 30, 2021 (for businesses other than ARPA Recovery Startup Businesses).

Qualifying for the ERC Tax Credit

The eligibility requirements for receiving ERC funds are many, and sorry folks, these aren’t especially clear either. You may be qualified to earn the ERC credits if your business has experienced a partial or complete suspension of operations. Of course, that leaves a lot of room for ambiguity. Things like capacity impacts due to social distancing requirements, reduced hours of operation, supply chain disruptions and delays are all qualifying events.

You may also qualify if your business has experienced a significant reduction in revenue during any quarter of 2020 or 2021 as compared to 2019. In 2020, it must be a 50 percent decrease in revenue per quarter, and in 2021, a 20 percent decrease per quarter.

Get Your ERC Tax Credit Now

The ERC tax credit is a refundable payroll tax credit you can claim quarterly to realize a reduction in your payroll taxes or receive cash refunds.

While it’s difficult to understand and not every business is in a position to study tax codes and payroll deductions enough to be familiar with its provisions, ERC Specialists can help you determine if you are eligible for it and ensure you received the maximum benefit available to you. That amount is based on the number of employees you have and how many quarters your business is qualified.

Further complicating matters, there are different rules for 2020 and 2021.

For wages paid after March 12, 2020, and on or before Dec. 31, 2020, the credit is equal to 50 percent of qualified wages. This equals a $10,000 maximum payout per employee. Your tax credit would be $5,000 for the year 2020 based on this scenario.

For wages paid Jan. 1, 2021, through Sept. 30, 2021, the credit is even more — up to 70 percent of qualified wages. However, the $10,000 maximum payout per employee is evaluated for each quarter. Therefore, the maximum credit is $7,000 per quarter, which equals $21,000 for three quarters. It is not calculated annually.

The bottom line may be hard to see at this point. That’s why ERC Specialists are here. Despite the ERC credit ending in Sept. 2021, the takeaway is that you can still submit and apply for ERC tax credits for up to three years after when your IRS Form 941s were filed. Contact us today to get the most ERC tax benefits available to you.

The post Did the ERC Credit End in September 2021? appeared first on ERC Specialists .

What is a Recovery Startup Business and How Does that Work with ERC?

Tue, 08 Feb 2022 20:15:00 GMT

Welcome to the latest installation of our “frequently asked questions” blog series. ERC Specialists is answering our top questions we receive from small businesses looking to file for Employee Retention Credit (ERC) tax credits.

This time, we’re answering: What is a recovery start up business and how does that work with ERC?

If you started a business in 2020 or 2021, kudos to you! You’ve faced unprecedented challenges and still persevered. We’re in awe. And we’ve got some good news. You may qualify for the Employee Retention Credit.

What is the ERC for Recovery Startups?

If you started your business operation after Feb. 15, 2020, you may be entitled to ERC benefits. The federal government is working hard to stimulate the economy and help fledgling small businesses in this post-pandemic(ish) world. They’re relaxing eligibility criteria and increasing the amount you can claim for each employee you’ve retained. They’re also extending the timeframe of the ERC program and giving businesses the opportunity to combine different programs to get the most benefits.

And the really great thing about ERC is that unlike PPP and some other programs, there is no defined way you must spend the funds, and you don’t have to repay them. Sounds like something you need for your startup? Keep reading.

The American Rescue Plan Act (ARPA) that was enacted into law in March 2021 changed the eligibility criteria (yes, again) for the ERC tax credits to include Recovery Startup Businesses.

How Does a Recovery Startup Business Qualify for ERC?

There are only a few stipulations for qualifying for the ERC as a Recovery Startup Business:

However, there are some limitations on qualifying. For example, if you own multiple companies or have a common ownership arrangement, the requirements are different (fear not, we’ll devote an entire blog to this topic!).

While Recovery Startup Businesses can’t claim the ERC credits for any of calendar year 2020 or Q1 and Q2 of 2021, you may claim the credit for these prior periods if you meet the government restriction or revenue reduction criteria. A bit confusing, but stay with us.

Recovery startup businesses can qualify for up to $50,000 in ERC credits for each quarter of Q3 and Q4 2021. Hooray!

All of these rules converge in many areas, so that’s why we always recommend working directly with a tax and payroll expert like ERC Specialists to delineate where and how you quality.

How Much ERC Funds Do I Qualify For?

As a recovery startup business, you are eligible to receive up to $7,000 per employee per quarter. The ERC funds are capped at $50,000 for the two eligible quarters for 2021.

Let’s look at an example. Let’s say you have 10 employees:

5 employees x $7,000 per employee = $35,000 in Q3 plus 5 employees x $7,000 per employee in Q4 = $35,000 for a total of: $70,000!

As a new business with 10 employees, you would receive a $70,000 payment from the IRS this year. Cha-ching!

What Recovery Startup Businesses Should Do Now

Now that you know what a recovery startup business is and how it works with ERC, contact ERC Specialists to get started, and claim the ERC benefits to which you’re entitled.

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I Own Multiple Companies. Can I Still Qualify for the ERC?

Tue, 08 Feb 2022 18:44:00 GMT

As promised, our latest blog continues to answer our most “frequently asked questions” from small business owners. This round, we explore the rules and challenges for owners of multiple businesses who are looking to qualify for the Employee Retention Tax Credit (ERC).

This is undoubtedly the most complex portion of the ERC program. That’s because even separate businesses under common ownership must be evaluated together for ERC eligibility.

Multiple Businesses and the ERC Tax Credit

Let’s start with what kind of ownership the IRS considers to be the same business, or “controlled group.” There are two main types of controlled groups — a parent-subsidiary in which one entity owns 50 percent or more of all companies, and brother-sister in which five or fewer people own at least 80 percent of each company in the group and have at least a 50 percent voting power. Furthermore, a third group, known as a combined group is a combination of parent-subsidiary and brother-sister companies. Whew!

Let’s look at some examples. Restaurants are a good one to explore. Many restaurant owners own several locations, either franchises or branches of an independent restaurant. For example, a multi-unit franchisee that owns five restaurants would be combined together to come up with the total number of employees and the total gross receipts of the business. This establishes the ERC based on year-over-year decline. This is extremely important since this aggregated amount determines whether the business can qualify for the ERC benefits.

To qualify for the ERC, you must have under 500 employees total between all of your small businesses. While it doesn’t matter if the kinds of businesses you own are related to one another, it does matter whether the controlled group rules are met for any business. You must aggregate the businesses as noted above.

Additional Rules for Multiple Business Owners

Let’s say you own a restaurant, a dry-cleaning company and a jewelry manufacturing company. If the ownership is controlled, all the businesses must be combined for ERC eligibility purposes.

You’ll need to stay under the 500-employee threshold when combining your average employee numbers from all of your businesses. As long as you qualify for the ERC because of the previous IRS rules — a partial or full suspension or sales decline against the same quarter in 2019 of at least 50 percent in 2020 and 20 percent in 2021 — you will need to follow some additional rules.

To begin with, for all businesses, the maximum ERC credit amount per employee is $5,000 for the year in 2020 and $7,000 per employee for each quarter in 2021 (max of $21,000 for the year). If any employee works for more than one company, keep in mind you can’t claim a credit for that employee in multiple companies.

Additionally, when calculating any losses to evaluate where you had the required 50 percent decline over 2019 in 2020 or a 20 percent decline in 2021, you must base it on the performance of the entire organization. For example, if one business is eligible based on poor performance in 2020 and two others performed well, all that matters is the aggregate of all numbers in totality. Whether this helps or hurts your chances to qualify for ERC funds depends on a number of factors.

Finally, if one controlled group qualifies for ERC tax credits, then they all do. One major benefit of the aggregation rule for business owners with multiple companies is that a full or partial suspension of business operations at one location applies to all of the other locations. Yes, you read that right. It applies even if you didn’t experience the same thing at your other locations.

Now this blog in particular may have your head spinning, and we get it. It’s a lot to work through. That’s why the ERC filing is NOT something you want to try to do on your own. When you choose ERC Specialists for your filing, we’ll answer all of your questions including whether owners of multiple companies can still qualify for the ERC. While the short answer is yes, the information above necessitates a tax and payroll expert to help you navigate this cumbersome process. Get in touch with ERC Specialists today, so we can get you the maximum ERC tax benefits available to you.

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Is the ERC Over? Is There Still Time to Claim Employee Retention Credits?

Wed, 19 Jan 2022 23:05:00 GMT

As we talk with small businesses across the U.S., we find that many business owners have seen the headlines about the ERC ending, and they think they can no longer qualify. Nothing can be further from the truth. The last quarter for which wages can be eligible for the Employee Retention Credit is September 30, 2021. However, employers have three years from the date of filing to claim their credits. That means that for returns filed for the second quarter of 2020, they can file up until July 2023.

If you are like most businesses, you have been negatively impacted by the COVID-19 pandemic. Businesses across the country suffered shutdowns, layoffs, and shortages. It’s been a trying time to be a business owner, to say the least. And the financial hardships seem to keep coming with every new variant. How can you get ahead and claim Employee Retention Credits (ERC) relief for your business before time runs out? At ERC Specialists, we’ve got the answers!

What is the ERC Tax Credit?

Congress created the ERC program, which was part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). This program seeks to encourage and reward business owners that have retained employees throughout the COVID-19 pandemic. The program gives business owners the opportunity to qualify for ERC tax credits, regardless of whether they received PPP loans.

What this means to you is that you may now be eligible for ERC tax credits of up to $33,000 per employee. What a relief! But now comes the hard part.

Qualifying for the ERC Tax Credit

There are numerous eligibility requirements for receiving ERC funds. These were issued by IRS notices and included things like the following:

● You may qualify if your business has experienced a partial or complete suspension of operations, such as:
○ Capacity impacts due to social distancing requirement
○ Reduced hours of operation
○ Delays and disruptions of your supply chain
○ On-site work or client meeting restrictions
○ Delays or suspensions of distribution
● You may qualify if your business has experienced a significant reduction in revenue during any quarter of 2020 or 2021 as compared to 2019. For example:
○ 2020 – 50 percent decrease in revenue/quarter
○ 2021 – 20 percent decrease in revenue/quarter

New Rules, Just Right

Though the original program was scheduled to end on December 31, 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 extended the ERC through June 30, 2021. One of the most important updates for business owners came via IRS Notice 2021-20, which provided new guidance allowing employers who accepted PPP loans to be eligible for the ERC tax credit retroactively to March 2020.

Now businesses that were impacted by COVID-19 can claim the ERC tax credit for each W-2 employee retained from March 12, 2020 through September 30, 2021. Additionally, the threshold for full-time employees increased from 100 employees to 500 in order for small businesses to qualify for ERC, which means you can now collect the funds even with a larger employee base.

If your business was partially or fully suspended, required to limit business hours, or experienced a 20 percent or more revenue reduction vs the same quarter in 2019, you may be eligible for a significant ERC tax credit. In fact, businesses that qualify for both 2020 and 2021 ERC tax credits may receive up to $26,000 per eligible employee.
That’s right. You may be eligible for up to $26,000 per employee!

Claim ERC Relief Before Time Runs Out

Sound promising but also confusing? We know. And we’re here to help.
All of this IRS guidance issued at various times during the pandemic has a lot of businesses left wondering if they qualify and for how much. Employers can claim the credit now by filing adjusted employment tax returns with the appropriate IRS forms. But many questions still linger for business owners. What documentation do you need? What is the process for applying for ERC? And where will you find the time?

Let ERC Specialists Help

We are payroll management and tax experts here to help you navigate the ERC process and collect the ERC tax credits you deserve. Our team is stacked with dedicated financial advisors ready to get you the maximum ERC funding available. That’s our only focus and our commitment to you. Contact ERC Specialists tax experts for a free evaluation, and claim the ERC tax relief for your business before time runs out.

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PRF Reporting Guidelines and Helpful Hints

Wed, 19 Jan 2022 20:48:00 GMT

If you received funding from the Department of Health and Human Services (HHS) under the Provider Relief Program (PRF) between July 1, 2020 and December 31, 2020 then you are now eligible to begin your reporting process. This process is required for all recipients who received $10,000 or more in aggregate PRF payments during this 6-month period. The reporting period officially opened January 1, 2022 and is set to close March 31, 2022. If you are required to complete PRF reporting, you must visit the PRF Reporting Portal to complete the reporting online. There are two different ways to substantiate your PRF income – Lost Revenues or Increased Expenses. Depending upon how you intend to substantiate your funding amount you may need all of the following to complete the reporting requirements.

· Your tax ID number

· Dates and amounts received for any and all COVID related grants or loans received

o This should include PPP loan proceeds, PRF funding, EIDL advances, state and local grants, Delta Dental (or any other) grants

· Quarterly profit and loss reports from January 1, 2019 to December 31, 2021

· A breakdown of quarterly revenue source by Medicare A+B, Medicare C, Medicaid/CHIP, Commercial Insurance, Self-pay, or other from January 1, 2019 to December 31, 2021

· Employee Census information from 2019 through 2020

· Total number of patient visits

In order to complete the questionnaire based upon Increased Expenses, it will be important to know the following definitions.

· Healthcare Related Expenses – Expenses falling into this category would be supplies, IT expenses, facilities expense, or any other healthcare-related expense related to your response to the COVID-19 pandemic.

· General and Administrative Expenses – All expenses not defined as healthcare-related expenses but still directly related to your response to the COVID-19 pandemic would be listed here.

In order to complete the questionnaire based upon lost revenues, it will be important to know the following:

· You will report quarterly drops of revenue, not increases (put zero if there was an increase in revenue).

· If there was an immaterial drop of revenue you can use an alternate method such as a drop in production.

Helpful Hints!

· Each cell must contain a value in order for you to move on with reporting. If the value in that cell is zero then a “0” must be entered in order for you to move on.

· There is a question asking you to report any interest earned on PRF funds. This would only be of concern if the PRF funds were parked in an interest-bearing account for any length of time. We would doubt that any of our clients would have done this, so your answer is likely $0.

· Step 6 of the process asks if you are required to have a Single Audit completed by an independent CPA. This only applies to entities who received over $750,000 of PRF funding, so we would highly doubt that any of our clients would be subject to this requirement.

· The Section on Infection Control Expenses relates only to Nursing Home Facilities and is not applicable to dental service providers.

· Many, if not all providers, will likely be able to substantiate their PRF amounts with Lost Revenues only. If you think that you likely will be in that camp, you may not want to spend much time on the healthcare and general and administrative expenses since the only amounts that qualify are expenses related to your response to the COVID-19 pandemic.

HHS has published a guidebook for reference when completing the PRF reporting that we have found very specific and helpful. Please make reference back to this guide as you move through the reporting process.

Evolution of the ERC Tax Credit

Wed, 19 Jan 2022 14:12:00 GMT

Confused about the Employee Retention Credit (ERC)? You’re not alone. The IRS has made a series of changes to ERC since its inception and the complexity of those changes combined with little guidance from the agency itself has got small businesses across the country scratching their heads.

Do you qualify? What is the process? What documents do you need? Help! You may be feeling all of that and more. At ERC Specialists, we’re here to help you navigate the CARES Act ERC process and make it easy to claim the tax credits you deserve. Our team of dedicated tax experts is the key to enabling you to get the funding you need quickly.

Let’s take a look at the evolution of the ERC Tax Credit:

March 2020

The ERC is passed under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), part of the government relief program, to reward business owners for retaining employees throughout the COVID-19 pandemic. Business owners who have been impacted by COVID-19 can claim this refundable tax credit for each W-2 employee retained from March 12, 2020 through December 31, 2020.

At this time, business owners who accepted Paycheck Protection Program funds were not eligible.

December 2020

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 amended and extended the Employee Retention Credit under the CARES Act, including modifying and extending the Employee Retention Credit (ERC) for six months through June 30, 2021.

As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70 percent of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021.

January 2021

The IRS issued guidance indicating employers are eligible for ERC if they operate a business during January 1 through June 30, 2021, and:

The definition of qualified wages was also changed to provide for the following:

March – April 2021

The IRS issued several notices during these two months that are worth looking at as they change and clarify previous notices and guidance. These notices are referred to as Notice 2021-20 , Notice 2021-23 and Notice 2021-24 .

Probably most importantly for business owners, Notice 2021-20 provides new guidance that allows employers who received a PPP loan to be eligible for the ERC tax credit retroactively to March 2020. The notice also provides new requirements to substantiate employer claims.

Notice 2021-23 provides guidance on how to appropriately document the necessary decline in gross receipts as well as other changes, which include an expansion of eligible employers, nonprofits and colleges/universities as well as the definition of qualified wages.

In April, Notice 2021-24 extends the penalty relief previously indicated if a failure to deposit employment taxes resulted from a reasonable anticipation of ERC funding.

Finally, the America Rescue Plan (ARP) expands and extends the ERC through Dec. 31, 2021. It also allows for some severely affected businesses to claim credit for a greater share of employee wages. Additionally, ARP expands the credit to include startups and new businesses formed after Feb. 15, 2020, as long as their revenue is below $1 million.

In November 2021, the Infrastructure Investment and Jobs Act set a new cutoff date for the ERC. While the last eligible quarter was Q3 of 2021, employers can still make retroactive claims for 2020 and 2021 Q1–Q3. Q4 of 2021 is no longer eligible for claims, except for Recovery Startup Businesses, which are still able to claim relief for Q4 in 2021. All other businesses can make claims up to three years from the date of their 941 Quarterly Tax Returns.

As you can see, it is no walk in the park just to understand the many ERC changes that have occurred since its inception, let alone apply for benefits. Need a friend in the tax business who can decipher it all? Contact ERC Specialists today and get the tax credits you deserve!

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Supply Chain Issues and the Employee Retention Credit

Wed, 19 Jan 2022 02:31:00 GMT

The Employee Retention Credit (ERC) is a godsend to many businesses that have been financially impacted by the COVID-19 pandemic. And while it is an attractive opportunity to recover significant funds, the credit’s complexity combined with the ambiguity of the IRS’ series of guidelines have scared many businesses away. Applying for the credits requires advanced tax expertise, so small businesses everywhere are turning to tax and payroll experts like ERC Specialists for help.

That is a prudent move as understanding and applying for these high-value tax credits is a serious undertaking. The good news is that many businesses that have been affected by supply chain disruptions are now qualified to receive the funding. The IRS specifically calls this out in a recent notice:

“Per IRS Notice 2021-20, an employer may be considered to have a full or partial suspension of operations due to a governmental order if, under the facts and circumstances, the business’s suppliers are unable to make deliveries of critical goods or materials due to a governmental order that causes the supplier to suspend its operations. This supply chain disruption under the facts and circumstances would qualify the employer for the Employee Retention Credit (ERC).”

ERC Background

The Employee Retention Credit (ERC) is a refundable payroll tax credit introduced in 2020 and subsequently amended and expanded. It was offered as a means to encourage businesses nationwide to retain employees throughout the COVID-19 pandemic. This critical tax credit provides up to $26,000 per eligible employee, and it’s available now to small businesses, even if they accepted PPP loans.

The America Rescue Plan has now made an additional amendment to the policy that extends the ERC covered time period to cover wages paid between March 22, 2020 to September 30, 2021. That’s great news if your business was financially impacted by the pandemic, as most in the United States were.

Qualifying for the ERC Tax Credit

Since early 2020, businesses have dealt with supply chain issues. The COVID-19 pandemic brought the distribution of goods to a grinding halt, not only in the U.S. but around the globe. Manufacturing, construction, and retail have been hardest hit by the disruptions, but food services, hospitality, and even healthcare have been impacted.

These disruptions were often a result of governmental orders that required businesses to halt their operations. Suppliers were similarly affected, and their ability to fulfill customer orders continues to be a challenge to this day. In fact, supply chain issues are not expected to recover until well into 2022.

If this sounds like your business, you may be entitled to valuable tax credits through ERC. Let’s look at some examples.

Qualifying Disruptions for ERC Benefits

Let’s say your restaurant has 50 tables, but social distancing requirements forced you to limit seating to just half capacity at 25 tables. That constitutes a partial shutdown, and you may qualify for the ERC tax credit.

How about if your packaging supplier could only fulfill 70 percent of your order because of governmental restrictions, and it reduces your ability to sell your products? That is considered a qualifying disruption. Even if your company is open and serving customers at full capacity, the supplier’s issues could still be considered a partial suspension.

Perhaps you run a hotel and you’re putting millions of dollars into a renovation. Your lobby furniture was set to arrive over a year ago, but it has still not been delivered. You’ve had to cancel promotions and press events that were scheduled around the renovation as the timeline keeps being pushed back.

Of course, your financial impact should be significant and must be substantiated. Our team at ERC Specialists can help you prepare the appropriate documents to demonstrate the impact of supply chain issues on your business. If you meet either of the following two criteria, you’ll want to reach out to us immediately to get started on your ERC funding application, as there is a statute of limitations on the credit.

How Much Can I Get from the ERC Tax Credit?

The maximum credit in 2020 is equal to 50 percent of eligible employee wages (up to $10,000 per year), which equals a $5,000 credit per employee for the calendar year 2020.

In 2021, the maximum credit is equal to 70 percent of eligible employee wages (up to $10,000 per quarter), which equals a $7,000 credit per employee per quarter.

That means if you are eligible to receive ERC funding for the full coverage period, your maximum credit is $26,000 per W-2 employee.

At ERC Specialists, we have the payroll and tax expertise you need to help your business understand its eligibility and assist you in preparing the documentation you need to get ERC funding quickly. Don’t wait, Congress has only allocated a fixed amount of money to the ERC tax credit so businesses need to file promptly to get their share. Claim your valuable ERC tax credits today!

The post Supply Chain Issues and the Employee Retention Credit appeared first on ERC Specialists .

Your Business and the Employee Retention Tax Credit

Wed, 19 Jan 2022 02:13:00 GMT

Has your business been financially impacted by the COVID-19 pandemic?

Good news! You may now be eligible for Employee Retention Credits (ERC) of up to $26,000 per employee.

Did you know? The ERC program was created under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) as part of the federal government’s relief program to encourage and reward business owners that retain employees during the COVID-19 pandemic. Recently the policy was amended to enable business owners to qualify for ERC tax credits even if they received PPP loans. The time period the program covers was also extended from March 22, 2020 to September 30, 2021.

Does My Business Qualify for ERC Credits?

There are three different ways that your business can be eligible for ERC:

Small Businesses Are Eligible for ERC Credits

The ERC is meant for small businesses, not large corporations. The threshold of employees to be considered a small business increased from 100 employees to 500 to qualify for the ERC. A full-time employee is classified as someone that worked at least 30 hours per week, or 130 hours per month in 2019. Businesses with over 100, but under 500 FT employees in 2019 do not qualify for ERC funds in 2020. Businesses with over 500 FT employees in 2019 do not qualify for the ERC program, except for actual wages paid to employees that did not work due to a government shutdown.

2020 ERC Tax Credits Eligibility

If your business meets one of the three requirements listed above you are qualified for the ERC tax credit equal to 50% of eligible employee wages and healthcare costs.

Your Maximum Credit = $5,000 per employee

2021 ERC Tax Credits Eligibility

In 2021, the rules were amended and businesses were offered relief even for companies that have already received the PPP and/or the EIDL. The ERC tax credit is equal to 70% of eligible employee wages and healthcare costs.

Your Maximum Credit = $21,000 per employee

Businesses that qualify for both 2020 and 2021 ERC tax credits may receive up to $26,000 per eligible employee. The funds will be paid to employers as a refundable tax credit for retaining employees during the pandemic. At ERC Specialists, we’re the payroll management and tax experts. Our goal is to help you navigate the ERC process and collect the tax credits you deserve. Our team of dedicated professionals will enable you to get the maximum ERC funding available to you.

The post Your Business and the Employee Retention Tax Credit appeared first on ERC Specialists .

Happy New Year!

Sat, 01 Jan 2022 18:01:00 GMT

End of Year Financial Checklist for 2021

Wed, 22 Dec 2021 19:04:00 GMT

Like many of you, we have been anxiously awaiting direction from Congress on any potential tax changes for 2021 or 2022. It looks like we are safe from any significant tax changes for now, but the anticipation is undoubtedly that tax rates will go up once again in the not-so-distant future. The old adage tax planning of delay income and accelerate expenses is still valid, but this year may hold less weight if rates do indeed go up next year. With that in mind, tax planning done today should take advantage of deductions available today while leaving deductions on the table for future use when rates are higher.

We have put together a list of some last-minute items to think about before the year ends to ensure you have taken advantage of everything you can this year. Not all points will apply to you, but the list is worth reviewing to ensure items are not forgotten about.

Tracking Active Patients

Thu, 16 Dec 2021 14:34:00 GMT

Are you tracking the number of active patients in your practice?

Active patients can be defined as patients seen for any reason throughout a set period of time in the practice, typically the previous 12 to 18 months. It takes years to acquire an active patient base and should be treated as one of the most critical numbers in your practice. We usually see a healthy, active patient base maintained at around 1,600 patients per hygienist. If purchasing a practice, you may know that the dollar amount assigned to this active patient count is called “goodwill” – an expensive yet invaluable asset to your business.

Tracking the number of active patients in your practice will allow you to evaluate your hygiene capacity and essentially set the tone for the operational side of your practice. Typically, we see our clients’ hygienist department can see approximately eight patients per hygienist, per day, or one patient per hour.

See the example below on how we calculate the current number of patients that your hygiene department can see and how many hygiene days the practice needs for the patient base.

Knowing your active patient count is crucial to your practice’s success and can also help determine if a practice is worth purchasing at a given price. If the active patient count is healthy, you can certainly count on internal patient referrals versus pumping additional monies into external marketing efforts. Patient retention should be a significant focus in your practice to avoid the much more expensive alternative – patient seeking.

Application Portal for Provider Relief Fund Round 4 Now Open

Thu, 30 Sep 2021 15:31:00 GMT

Earlier this month, we let you know about a new round of provider relief funding for healthcare providers offered through the Health Resources and Services Administration (HRSA). Applications for this fourth round of funding opened yesterday. If you plan on applying, we suggest you register as soon as possible as the first step in the application process is to verify your Tax ID number in their system, which can take up to ten days. The application deadline is October 26, 2021, at 11:59 pm ET. You can find a sample application here to help you decide whether or not you want to take the time to apply.

The application seems fairly straightforward, with the exception of the definition of “Operating Expenses from Patient Care,” which is defined as the following per the HRSA.

“Operating expenses from patient care” means the operating expenses incurred as part of the delivery of care, including:

The following are not considered patient care expenses and must be excluded from the reported patient expenses figures:

For further definitions and instructions, please visit the HRSA website here .

HRSA Announces an Additional Round of Grants for Healthcare Providers

Tue, 14 Sep 2021 17:14:00 GMT

The Health Resources and Services Administration has recently announced an additional round of funding for medical and dental practices. These payments would be in addition to rounds one, two, and three of the provider relief fund payments issued to many of our clients last year. Applications for the additional funding will open on September 29, 2021.

Who should apply -

· Anyone who is a Medicaid provider. This is especially true if you practice in a rural area. The department of HRSA has set aside $8.5 billion of rescue grants specifically for practices in rural areas. You can easily find out if your practice qualifies by entering your address here .

· Anyone who experienced lost revenues or increased expenses due to the COVID-19 pandemic between July 1, 2020, and March 31, 2021. Many of our clients were reopened and back to full operations during that time, but practices on either coast may have experienced practice disruptions and closures during that period that cut revenues or increased costs.

We are unsure of how the HRSA is defining “lost revenues or increased expenses” at this time but hope to learn more when the application period opens, and we can get a look at applications. If you are interested in applying, we suggest you gather your financial statements for July 1, 2020, to year-end 2020 and for January 1, 2021 to March 31, 2021.

You can find out more about the fourth round of relief payments here .

PPP Round 2 Forgiveness

Wed, 18 Aug 2021 05:00:00 GMT

The second draw of the Paycheck Protection Program (PPP) ended on May 31, 2021. Many of our clients were eligible to apply for a second draw of funding. If you are one of those lucky individuals, you likely are now eligible to apply for forgiveness for your second draw.

We recommend you begin your forgiveness application process once you have reached 24 weeks past your second draw funding date. In order to apply for forgiveness, you will need to reach out to the bank that holds your PPP loan and ask how they would like you to apply for forgiveness on your second draw. The forgiveness application is incredibly straightforward and easy for most banks and should not take much of your time. Once you have received your PPP second draw forgiveness approval, make sure to let your CPA and advisor know.

Regarding PPP Round 1, if you have not already submitted for forgiveness, you will need to do so as soon as possible to avoid it converting to a true loan with interest terms. Please see our blog post here for more information on forgiveness for PPP round one.

Reporting Requirements & Timeline for PRF Payment Recipients

Mon, 21 Jun 2021 13:50:00 GMT

In the flurry of financial assistance that arrived in 2020, many of our clients received funding Health and Human Services(HHS) Provider Relief Fund (PRF). The Department of HHS removed the dates for reporting requirements late last year, but we have been made aware that there will indeed be reporting requirements for anyone who received funding under this program. Please visit the link here for a detailed list of reporting requirements and the auditing webpage. The reporting requirement dates posted are as follows:

If you have not already, you will need to register for the portal using this link here: https://prfreporting.hrsa.gov/s/ . See our previous blog post here for more information and a link to frequently asked questions on PRF Reporting. You will need to look up the date that you received the funding under the PRF program and make sure to mark your calendar with the appropriate deadlines for both using the funds and for the reporting requirements.

If you have any additional questions on this topic or need assistance, please reach out to your advisor.

Tying Up The Loose Ends From PPP Draw 1

Fri, 28 May 2021 17:11:00 GMT

The majority of our clients have applied for and been granted forgiveness for PPP Round 1. This should be a straightforward and fairly simple process with your bank. If you have not done so already, now is the time to get this application done. You have 10 months from the end of your 24 week PPP covered period to apply for forgiveness. After the 10 months have passed, the original proceeds distributed to you will be automatically restructured as a loan with a 2 or 5-year maturity, depending on when you originally received the proceeds.

Contact your bank and ask how they would like you to send in your forgiveness application. If you have already received forgiveness, make sure to retain your SBA release letter and let your planner and CPA know that forgiveness has occurred.

For those of you who applied for and received a PPP second draw, you may be getting antsy to get this one forgiven now as well. We do not suggest you begin your application for forgiveness on PPP second draw until at least 24 weeks after receiving your second draw amount. Mark that date on your calendar and reach out to your bank at that time to fill out the application for forgiveness on round 2.

Unemployment Fraud

Fri, 23 Apr 2021 16:32:00 GMT

We have recently seen a tremendous increase in unemployment insurance fraud throughout the country and, unfortunately, have recently experienced this first hand at our firm. The process to file for unemployment has gotten much easier for most states within the last year, and although that was a good thing for those when they needed help the most, it also creates a situation rife with fraudulent claims.

If you receive notice of an unemployment claim for any employees who are still actively working for you, it is your duty to let your state's unemployment office know that the claim is fraudulent. The claim is likely being made by someone else using your employee's social security number. Please also inform your employees to be on the lookout for any other means of identity theft.

2021 Employee Retention Credit

Thu, 22 Apr 2021 13:26:00 GMT

We previously informed you of an opportunity to take an Employee Retention Credit for 2020 (see our blog post from February 22nd). Hopefully, many of you have begun work with your CPAs and payroll companies to get this credit moving along, although there is no rush to process this credit. You have up to two years after the fact to go back and claim the credit.

As part of the Disaster Tax Relief Act of 2020, business owners are also able to claim the Employee Retention tax credit for 2021 if eligible. To determine whether or not you are eligible, you should compare your Quarter 1 2019 to your Quarter 1 2021. If you have experienced a drop in revenue of 20% or greater, then you are eligible for a refundable credit of up to $7,000 per employee.

Although many of our clients are experiencing better than ever collections, some of you may be eligible if you got off to a slow start this year or if you had a particularly great first quarter in 2019. We encourage everyone to at least check to see if they are eligible for this credit.

If you are eligible for the credit, the amounts should be reflected on your first quarter 941 to allow for the refundable credit to flow through to you. Work with your payroll company and/or your CPA to ensure that you file for the credits correctly.

IRS Extends Tax Filing Deadline for Texas

Wed, 24 Feb 2021 16:30:00 GMT

The IRS has recently announced that it will be automatically extending the April 15th tax filing deadline to June 15th for all Texas residents due to the state’s weather disaster that left millions without power or water. Quarterly estimated tax payments will also get extensions. The April 15th quarterly estimate date has been extended to June 15th, so Q1 and Q2 payments will be due June 15, 2021.

Please work with your CPA on the filing of your taxes and estimated tax payments.

Navigating the Complicated Web of the Employee Retention Tax Credit

Mon, 22 Feb 2021 06:00:00 GMT

Many of you have been asking questions about the Employee Retention Tax Credit (ERC) for 2020. Up to this point, we have been reluctant to issue official firmwide guidance as we have been waiting on the IRS to do the same. As of the date of this publication, we have been patiently awaiting the IRS to issue its final rules on the ERC, but alas, we continue to wait. (This link should be updated when the IRS officially decides how to handle the ERC.) While we wait, we wanted to issue some guidance that may help you decide how to address this credit.

The ERC is a refundable tax credit against employer Social Security tax equal to 50% of the eligible wages paid from March 12, 2020, to December 31, 2020, up to $10,000 per employee (so $5,000 credit per employee). You become eligible for the credit if you were “fully or partially” suspended from work due to government order. (Thanks to FAQ #34 example 4 , we would interpret that to mean all of our Doctors.) These credits can add up to a lot of money, but be cautious - ERC cannot cover the same payroll already reimbursed by PPP funds.

With the information we have today, it looks like this credit will be broken down into two main categories:

Did you pay employees while you were closed due to COVID?

If the answer to this question is yes, then at this point, we see no reason why you would not be eligible for the ERC for wages paid during the term of your closure beginning with the later of March 12, 2020, and closure beginning to the end of your closure period. If you chose a 24 week PPP covered period; then you can stack your PPP covered wages toward the end of your PPP period and use ERC credits to cover wages paid while you were closed.

If the answer to this question is no, then you have no wages to pay during a closure due to government order and therefore have no wages to use for the credit.

Did you experience a 50% drop in revenue when comparing Q2 2020 with Q2 2019?

This is a high threshold to cross. The majority of businesses in the middle of the country will not be able to show a 50% drop in revenue, but if you are located on either coastline, you may. If you can show a 50% drop in revenue in Q2 2020 when compared to Q2 2019, you are able to take the credit from March 12, 2020, to the end of the 2020 quarter in which your revenue reaches 80% of 2019 levels. This means you can take the ERC credit for a longer period and will definitely mean that this amount will be greater for you. However, proceed with caution here. The ERC cannot be applied to wages already reimbursed by PPP funds. This means you will need to carefully review payroll reports and PPP forgiveness applications to compare the two and make sure to count only wages not reimbursed by PPP funds in your ERC calculation.

The above calculation will not be an easy one and will likely need the assistance of both your payroll specialist and CPA to arrive at the correct number.

Finally, if you qualify for the ERC under either circumstance above, then you will need to amend the applicable 941s to obtain the refund. Work with your payroll specialist to get this accomplished.

ERC for 2021

The ERC program does not expire at the end of 2020 and is available for those offices off to a rocky start to 2021. If you are down 20% or more in Q1 or Q2 of 2021 compared to the same quarter in 2019, the credit is actually larger –70% of wages up to $14,000 per employee. You will need to review your quarterly revenue in April and July of 2021 for the previous quarter to see if you qualify.

Provider Relief Fund Reporting

Tue, 19 Jan 2021 06:00:00 GMT

If you received funds under the CARES Act Provider Relief Fund from the Health and Human Services, you are required to comply with certain reporting elements in order to stay in compliance with the program. Anyone who received over $10,000 is required to register here: https://prfreporting.hrsa.gov/s/

There is not currently a due date for registration, however, we recommend that all recipients of funds register as soon as possible.

Once you are registered, you will be contacted when the reporting elements are published and will be informed of any due dates for this second portion of the process.

Provider Relief Funds Reporting FAQs

PPP - Second Draw

Tue, 12 Jan 2021 06:00:00 GMT

Banks will begin accepting applications this week for the second draw of PPP loans for eligible businesses. In many ways, this second round of funding will be very similar to the first. Loans will be provided in the amount of 2.5 times the average payroll calculated in the same method as the first round. Meaning your second draw loan amount should be very similar to the first. (Certain industries can obtain a higher amount. This higher calculation does not apply to healthcare-related industries.) You have up to 24 weeks to use this funding. Funds can be used to cover payroll, rent, utilities, but added to this list is now supplier costs, covered property damage, and PPE. Of the funds you receive, 60% must be used for payroll, just as before.

The second round of PPP funding will be considered non-taxable income both on the granting of the loan and its forgiveness, making this an incredibly attractive program for those who are eligible.

There are a couple of key differences between this round of funding and the last:

If you are comfortable answering yes to the necessity question, there would be no reason to delay submitting a loan application. If you are comfortable submitting a loan application but are concerned with how the SBA will ultimately interpret this question, one option would be to move forward with submitting your loan application but hold off spending the loan proceeds and wait for clarification. If a strict interpretation of loan necessity is released, the loan proceeds could be repaid.

*If you were not in business for all of 2019, there are still ways for you to be eligible for funding. Please call your advisor for more details on this requirement.

Emergency Coronavirus Relief Act of 2020

Wed, 30 Dec 2020 06:00:00 GMT

This year has undoubtedly brought many challenges, but once again, we are given an opportunity to adapt and make the most out of what 2020 has to offer. The COVID Relief Act has officially passed. Here are some of the key details that may affect you:

For more details on the above, we found this article to be helpful:

Tax Provisions In Covid-19 Relief Bill

As we look toward 2021 and close out 2020, we are reminded of one of our biggest lessons from 2020: Stay flexible. Plans change. The most successful people are those who adapt.

We hope that we have been an invaluable partner to you in 2020, and we look forward to providing you with information, guidance, and flexibility in 2021.

Happy New Year!

COVID-19 Relief Bill

Wed, 23 Dec 2020 06:00:00 GMT

Congress has finally passed the long-awaited 2nd COVID-19 Relief Bill. We are hopeful that President Trump will make the bill final very soon. I’ve read this is the longest bill in history at a whopping 5,600 pages! As you can imagine, there are many provisions within the bill, some of which will have little impact on you such as additional individual stimulus checks and extended unemployment benefits.

The most consequential result of the bill for you is a reverse of course on the ability to deduct expenses covered by PPP loans. This is a massive benefit for all of our clients.

The new bill also provides more funding to the Small Business Administration (SBA) for additional PPP loans. While additional loans will be more restrictive (only for entities with fewer than 300 employees, non-public, etc.), in our initial review it seems that many of you may be eligible for additional funding.

As with anything, we will need to evaluate the final provisions as well as the SBA’s interpretation, changes, and technical corrections, but no doubt this is positive news for PPP borrowers.

Below is a link to a Journal of Accountancy article that summarizes the impact of the bill on PPP-related issues. I will continue to communicate with you as additional updates are announced.

COVID-19 Relief Bill PPP Provisions

CARES Act Provider Relief Fund Update

Fri, 18 Dec 2020 06:00:00 GMT

Many of our clients have applied for grants through the CARES Act Provider Relief Fund (PRF). Some received funding in phase 2, and some received funding in phase 3. There are significant changes to the Terms and Conditions for all providers who received funding, no matter what tranche the money was received. A couple of key points to consider are as follows:

In general, the terms and conditions for accepting the CARES Act PRF grant have gotten much more favorable over time. Although it now appears that most of our clients can accept these funds without fear of violating the conditions for acceptance, you should still spend the time to review the below Terms and Conditions and FAQs carefully and look at your 2019 and 2020 collections before you decide to retain the funds.

CARES Act Provider Relief Fund Phase 3 Terms & Conditions

FAQ’s

If you feel that your practice cannot keep the funds, you can return the funds within 90 of receipt with no issues.

If you have retained the funds after 90 days, you are deemed to have agreed to the funds’ terms and conditions and will be expected to comply with reporting requirements due on January 15, 2021. For a summary of what is to be included in the required reporting, please see the Reporting Requirements Summary below.

CARES Act Provider Relief Fund Reporting Requirements

Making a List, Checking it Twice

Fri, 11 Dec 2020 06:00:00 GMT

It is that time of the year again! Time to make sure you have crossed all year-end planning items off your list. This year has undoubtedly come with some unique challenges, and with that has come some unique items to your year-end planning list.