Lets talk first about Reporting Employee Retention Credit On 1120S 2021 :
Our group here what do these people doing everybody in this room is helping teach people about ERC and uh always provide a gorgeous breakfast and have people really learn more about the program we need to head to the room where we are able to display some of the checks that we are getting for business and I want to see that what is this this is uh hundreds of countless dollars literally Kevin numerous millions of dollars so these are duplicate copies of the letters that go to clients confirming that the check is on the method I indicate you understand if you simply start to look at some of these here I mean this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I suggest it’s just I mean think of how many actual clients that went through the program yeah this is the very end this is the party at the end when the check is confirmed the numbers are validated and the check is on the mail in the mail from the IRS heading to the customer so that’s how you have the ability to track it you know when you
get this you know the check is gone for sure and that’s when they pay so they do not pay anything until they really get the cash they do not pay bottom line Wonder trust anything up until this letter is validated the check is on the way they deposit it into their checking account and they can really trust Wonder trust that the process has actually been completed and the number of you believe you’ve processed given that you started this we’re about 35 000 of these for
about 6 billion dollars wow so clearly they know what they’re doing which’s what you require you require specialists on the other end of the phone to process this and get it to where you get one of these that’s what matters all right Mr Wonderful here you’re at my YouTube channel we’re discussing something really crucial today the staff member retention credit which most of you have never ever heard of I certainly had not become aware of it until very recently and discovered a lot about it since this is most likely the most affordable cost of capital for any small business anywhere
anytime if you have staff members in between five and five hundred so I have actually got the professional with me this is Josh Fox he’s the founder and CEO of bottom line Concepts they’re the largest processor of these ERC credits this is a 170 page program so it’s hard this isn’t like PPP we just contact your bank manager and state offer me a loan it does not work there’s not a loan it’s an application and Josh is going to inform us all about it and how to get it and why I have actually ended up being yes the Ambassador and paid representative for this I like this program it’s disappearing very soon you got to learn everything about it let’s talk employee retention credit Josh Fox what is an ERC let’s simply start there so during the Trump Administration when President Trump was enacted they developed the cares Act and the cares act used services three opportunities you had the PPP loan you had the eidl loan and you had the ERC tax refund and practically everyone it makes a big distinction right there two of them are loans and one’s a refund precisely so the ERC is a refund that’s.
correct the money cash payroll tax refund okay go on sorry I simply have to make sure we got that point I imply that’s a huge distinction a loan versus money money I like cash money that’s what we’re discussing okay and the other loans are done so we’re sitting here in 2023 and the eidl is over the PPP is over and the only one left from the original cares Act is the ERC and yes Kevin it is a lovely hard check in the mail where you get real cash from the IRS all right so let’s speak about how it works due to the fact that it sounds like to me if it’s a if it’s worker retention credit that person needed to be a staff member so I’m going to make the Assumption this money is not for the owner not for individuals on the cap table not for shareholders it’s for staff members right you needed to have actually owned a service however it’s based on you having W-2 workers in America not 10.99. As long as you had W-2 employees and you paid federal payroll taxes that’s why you would be eligible so you have to be on payroll in 2020 on the W-2 and you have to be on payroll for the first six months of 2021 on the W-2 appropriate so there were six quarters the program was open well stroll us through the 6 quarters so you had quarters two three and four of 2020 and you had quarters one two and 3 of 2021. alright so that’s how it’s determined you have to be on the W-2 during that period now let’s talk my favorite part cash how much can you get back per worker that was on a W-2 in those 6 quarters so the estimation in 2020 to be exact Kevin is 50 of the worker’s salary to an optimum of 5 thousand dollars per worker for the year of 2020 and in 2021 the numbers escalated to 70 of the employee’s salary to an optimum of seven thousand per quarter how did that occur um they just changed the rules in.
2021 versus since the chaos of the pandemic so they wished to even get more to keep those employees on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 up to five thousand Max and then what occurs 21 000 Max in 2021 oh that’s how you develop twenty 6 thousand twenty one thousand to twenty twenty one plus 5 thousand in twenty twenty that’s twenty 6 thousand dollars per staff member that is since that’s a great deal of money it is now there’s a caution here the PPP cash would have to be lowered from the twenty 6 thousand dollars so if you took PPP loan one and PPP loan two you would lower the 26 000 so what we’re seeing typically Kevin is if you took PPP money somewhere around ten thousand dollars a person so let’s say hypothetically you owned a dining establishment in New York City where I’m from and you had a hundred employees and you took PPP cash you would still get a million dollar in the mail from the internal revenue service so it’s big clearly now the huge question is why does no one understand about this due to the fact that look when I initially heard about this when I initially fulfilled Josh you understand I’ve got lots of financial investments in great deals of business I’m a significant supporter for entrepreneurship in America and make lots of lots of investments in business owners of which lots of suffered through the pandemic when I initially found out about this I called BS I don’t think it because I use the PPP we went through the cash center Banks to get it it was extremely easy to do we had our CEOs call the banks they got their loans which were well deserved and we utilized them sensibly to survive during the pandemic so when I found out about this I stated nah it can’t be true but when I dug around I even called to my politician buddies Guv Senators they didn’t learn about it I suggest that’s how you understand that’s how misinformation is that there’s no info out there then a bunch of individuals informed me well you can’t get it due to the fact that you took the PPP also not true so let’s ask Josh why does nobody know about the worker retention credit you understand what’s intriguing you’re speaking about the banks Kevin due to the fact that in the PPP loan process the federal government made it extremely clear that if you wanted a PPP loan you would call Wells Fargo Citibank Bank of America any of the big banks in our nation and they would process procedure in Canada a pre-pp loan there’s no loans in Canada by the way it’s simply procedure process that’s all um and here there was chaos due to the fact that keep in mind in the original cares act you might refrain from doing both programs so if you had actually done PPP you might refrain from doing ERC in the original program and when they changed the law in 2021 the banks were refraining from doing ERC since it’s not alone so you’re getting a tax refund so the federal government never ever made it clear to any person about how to.
do this does your CFO know how to do this not truly she or he’s never done it before do the banks do it nope the banks do not do it the payroll business yeah a few of them are doing it as a payroll business your accountant no your accounting professional’s never done this prior to unless you have an account that entered into this company and bottom line my firm Kevin has stayed in business since 2009 and we have actually been dealing with the federal government and the state federal government to recover money for Fortune 500 Fortune 1000 companies so a lot of our huge huge business clients have actually dealt with bottom line to recover other government programs we’ve done sales tax and use tax unemployment tax work opportunity tax credits research and development tax credits unclaimed home real estate tax all of these other federal government programs.
The worker retention tax credit is a broad based refundable tax credit designed to encourage.
companies to keep workers on their payroll. The credit is 50% of approximately $10,000 in incomes paid by an.
Because of COVID-19 or whose gross invoices, employer whose business is totally or partly suspended.
decrease by more than 50%.
1. The credit is readily available to all companies regardless of size consisting of tax exempt companies. There are.
only 2 exceptions: (1) state and local governments and their instrumentalities and (2) small.
companies who take Small company Loans.
2. To certify, the employer has to satisfy one of two alternative tests. The tests are calculated each.
calendar quarter– Either.
o the employer’s company is fully or partially suspended by federal government order due to COVID-19.
throughout the calendar quarter or.
o the company’s gross receipts are listed below 50% of the similar quarter in 2019. Once the.
employer’s gross invoices exceed 80% of an equivalent quarter in 2019 they no longer certify.
after completion of that quarter.
Calculation of the Credit.
The quantity of the credit is 50% of the qualifying earnings paid up to $10,000 in total.
It works for incomes paid after March 13th and before December 31, 2020.
The meaning of certifying wages differs by whether an employer had, on average, basically than.
100 workers in 2019.
Business that concentrate on ERC filing assistance normally provide expertise and support to help companies navigate the complex process of declaring the credit. They can offer different services, consisting of:.
How is the employee retention credit calculated? Reporting Employee Retention Credit On 1120S 2021
Eligibility Evaluation: These business will examine your company’s eligibility for the ERC based upon factors such as your industry, earnings, and operations. They can help determine if you fulfill the requirements for the credit and identify the maximum credit amount you can declare.
Documentation and Estimation: ERC filing services will assist in gathering the necessary documentation, such as payroll records and monetary declarations, to support your claim. They will likewise assist calculate the credit quantity based on eligible salaries and other certifying costs.
Retroactive Claim Review: If you are qualified to claim the ERC for prior quarters, these business can examine your past payroll records and financials to recognize prospective chances for retroactive credits. They can assist you amend prior tax returns to claim these refunds.
Filing Support: Business specializing in ERC filings will prepare and send the necessary kinds and documentation in your place. This includes finishing Type 941 or any other required tax forms.
Compliance and Updates: ERC guidelines and guidance have actually developed over time. These business stay updated with the most recent changes and make sure that your filings comply with the most existing standards. They can likewise offer ongoing assistance if the IRS requests extra info or conducts an audit related to your ERC claim.
It’s important to research study and vet any company providing ERC filing assistance to guarantee their credibility and knowledge. Look for recognized companies with experience in tax and payroll services, or think about connecting to trusted accounting companies or tax experts who provide ERC filing support.
Bear in mind that while these companies can supply important help, it’s constantly an excellent idea to have a basic understanding of the ERC requirements and procedure yourself. This will help you make informed choices and make sure accurate filings.
The Worker Retention Credit (ERC) is a refundable tax credit introduced by the U.S. government as part of COVID-19 relief measures. The goal of the ERC is to encourage businesses to keep and pay their staff members throughout the pandemic, even if their operations have been impacted.
Here are some key points about the ERC:.
Eligibility: The ERC is available to eligible employers, consisting of for-profit organizations, tax-exempt companies, and particular governmental entities. To qualify, companies need to meet one of two criteria:.
The business operations were totally or partly suspended due to a government order related to COVID-19.
Business experienced a considerable decrease in gross receipts. As discussed previously, for 2021, a considerable decline is defined as a 20% decrease in gross invoices compared to the exact same quarter in 2019. For 2022 and beyond, a considerable decrease is defined as a 20% decrease in gross invoices compared to the exact same quarter in 2019, or a 20% decrease in gross invoices compared to the instantly preceding quarter.
Credit Quantity: The ERC is a refundable tax credit that offsets the employer’s share of Social Security taxes. The credit quantity amounts to a portion (approximately 70%) of qualified earnings paid to employees, including specific health plan costs. The optimum credit per employee is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: Initially, organizations that got a Paycheck Protection Program (PPP) loan were not qualified for the ERC. Legislation passed in late 2020 and extended in 2021 allows services to declare the ERC even if they got a PPP loan. The same earnings can not be used to claim both the PPP loan forgiveness and the ERC.
Retroactive Arrangement: The ERC has been retroactively broadened and boosted, allowing qualified employers to claim the credit for certified wages paid as far back as March 13, 2020. This retroactive arrangement supplies an opportunity for organizations to change prior-year income tax return and receive refunds.
Declaring the Credit: Companies can declare the ERC by reporting it on their work tax returns, usually Form 941. If the credit surpasses the quantity of employment taxes owed, the excess can be reimbursed to the employer.
It’s important to note that the ERC arrangements and eligibility criteria have actually evolved with time. The very best strategy is to seek advice from a tax expert or check out the main internal revenue service website for the most comprehensive and current info concerning the ERC, including any current legal modifications or updates.
To receive the ERC, a company should satisfy one of the following criteria:.
The business operations were completely or partly suspended due to a government order related to COVID-19.
The business experienced a significant decline in gross receipts. For 2021, a substantial decline is defined as a 20% decrease in gross invoices compared to the same quarter in 2019. For 2022 and beyond, a considerable decline is specified as a 20% decrease in gross receipts compared to the very same quarter in 2019, or a 20% decrease in gross invoices compared to the immediately preceding quarter.
The ERC is readily available to businesses of all sizes, including tax-exempt organizations, but there are some exceptions. For example, government entities and companies that received a PPP loan might have limitations on claiming the credit.
The procedure for claiming the ERC involves completing the needed kinds and including the credit on your employment tax return (normally Kind 941). The exact time it takes to process the credit can vary based upon several aspects, consisting of the complexity of your business and the work of the IRS. It’s recommended to seek advice from a tax expert for assistance particular to your situation.
There are several companies that can assist with the process of claiming the ERC. Some well-known business that offer support with ERC claims consist of ADP, Paychex, Deloitte, and Ernst & Young.
Please note that the information provided here is based upon basic understanding and may not reflect the most current updates or changes to the ERC. It is very important to consult with a tax professional or visit the official IRS site for the most precise and up-to-date information regarding eligibility, claiming treatments, and available help.
Less than 100. The credit is based if the employer had 100 or less staff members on average in 2019.
on earnings paid to all employees whether they actually worked or not. In other words, even if the.
employees worked full-time and made money for full time work, the company still gets the credit.
Greater than 100. The credit is if the employer had more than 100 workers on average in 2019.
enabled only for earnings paid to staff members who did not work during the calendar quarter.
In both cases, “salaries” includes not just cash payments but also a portion of the expense of company.
provided health care. Reporting Employee Retention Credit On 1120S 2021
Employers can be right away compensated for the credit by decreasing the quantity of payroll taxes they.