You May Qualify for Up to $26K Per Employee
Are you a business owner in Phoenix? Did your CPA tell you that you don’t qualify for an Employee Retention Credit (ERC)? Or, did you get a PPP check and you now think that you don’t qualify?
That’s totally false! Your business may still qualify for up to $26,000 per employee.
Contact us today for a free consultation to learn if your business is eligible for an ERC refundable tax credit.
What Is Employee Retention Credit (ERC)?
The Employee Retention Credit (ERC) is a refundable tax credit that was created in response to the COVID-19 pandemic to encourage businesses to keep their employees on the payroll. The credit is intended to help businesses that have experienced a significant decline in revenue or have been forced to shut down due to the pandemic.
What Employers Are Eligible for ERC?
The ERC is available to eligible employers who pay qualified wages to their employees. The credit is equal to 50% of qualified wages paid to each employee, up to a maximum of $10,000 per employee per calendar quarter. The credit can be claimed on the employer’s quarterly payroll tax returns, and any excess credit can be refunded to the employer.
To be eligible for the ERC, an employer must meet certain criteria, such as experiencing a significant decline in gross receipts or being subject to a government order to fully or partially suspend operations. The credit is available to businesses of all sizes, including tax-exempt organizations.
Employers who qualify can claim the ERC retrospectively by submitting Form 941-X for every quarter they made eligible wage payments. This form can be filed within three years from the deadline of the original payroll tax payment.
Do Owner Wages Qualify for ERC?
Yes, in certain circumstances, owner wages can qualify for the Employee Retention Credit (ERC). However, the rules around owner wages and eligibility for the credit can be complex and depend on several factors, such as the type of entity, the owner’s involvement in the business, and the timing of the wages paid.
For example, in the case of a sole proprietorship or a single-member LLC, the owner’s wages may be eligible for the ERC if they are reported as self-employment income on the owner’s individual tax return. Similarly, in the case of a partnership, the partner’s wages may be eligible for the ERC if they are reported as self-employment income on the partner’s individual tax return.
In the case of an S-corporation, the owner’s wages may be eligible for the ERC if the owner is not a majority shareholder and the wages are not considered “excessive” under the IRS rules. In general, “excessive” wages are those that are considered unreasonable based on the services performed by the owner.
It’s important to note that the ERC has several complex rules and requirements, and eligibility can vary depending on the specific circumstances of each business. That is why we highly recommend that you contact us to schedule a free consultation to learn more about whether or not your owner’s wages qualify for the ERC.
Key Dates for Employee Retention Credit
The ERC was initially available for wages paid from March 12, 2020, through December 31, 2020. However, it has been extended and modified several times, most recently by the American Rescue Plan Act of 2021, which extended the credit through December 31, 2021, and made it available to certain new startup businesses.
Required Documentation to File an ERC Claim
Employers must provide the proof of the following to be eligible for ERC:
- Sustained a full or partial suspension of operations that limited group meetings, travel, or commerce due to orders from an appropriate governmental authority because of COVID-19 during 2020 or the first three quarters of 2021, or
- Experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021, or
- Qualified as a recovery startup business for the third or fourth quarters of 2021.
What Can’t Be Claimed for Employee Retention Credit
In any given tax period, it is not possible to claim the ERC for wages that have already been reported as payroll costs for the purpose of PPP loan forgiveness or certain other tax credits.
What Employers Can Do If Told They Don’t Qualify for ERC
As mentioned above, the ERC claims process can be complex and confusing for employers. Our team, however, is here to help answer any questions or concerns you may have about the process. We want to make sure that eligible Phoenix business owners get the highest ERC refundable tax credit possible.
Bonus, if we can’t help you get money it won’t cost you a cent. So, contact us today to find out if your business is eligible for an ERC refundable tax credit!