The COVID-19 pandemic has had a significant impact on small businesses, and to support them in retaining their employees, the federal government has introduced the Employee Retention Credit (ERC). In this article, we will provide an overview of what the ERC is, how it works, and how it can benefit small businesses located in Washington, Oregon, and Idaho.
Tri-Cities Tax and Accounting is a tax and accounting firm that provides expert advice on tax-related matters to small businesses in Washington, Oregon, and Idaho. Our team of experienced tax professionals can help your business determine if you’re eligible for the ERC and assist you in claiming the credit.
Delivered thousands of successful projects, optimizing tax strategies and maximizing returns for clients.
Delivered thousands of successful projects, optimizing tax strategies and maximizing returns for clients.
The Employee Retention Credit (ERC) is a refundable tax credit that was created as part of the Corona virus Aid, Relief, and Economic Security (CARES) Act in 2020 to help businesses retain their employees during the COVID-19 pandemic. The credit is intended to encourage businesses to keep employees on their payroll even if the business is experiencing financial difficulties.
Businesses of all sizes, including tax-exempt organizations, may be eligible for the Employee Retention Credit (ERC), subject to certain exceptions. The eligibility criteria for the ERC involve two possible scenarios. Firstly, a business may qualify if it was fully or partially suspended by a government order due to COVID-19. Secondly, the business may qualify if it experienced a significant decline in gross receipts in a calendar quarter compared to the same quarter in 2019. It is worth noting that specific rules apply to determine what constitutes a significant decline in gross receipts, depending on the legislation in place at the time.
The ERC provides eligible businesses with a maximum credit amount of $33,000 per employee for wages paid between January 1, 2023, and December 31, 2023. This represents a significant increase from the previous maximum credit amount of $7,000 per employee for wages paid between March 13, 2020, and December 31, 2020. It is important to note that this maximum credit amount is subject to certain restrictions and limitations based on the business’s payroll tax liability and other factors.
Businesses can claim the ERC by reporting it on their federal employment tax returns, such as Form 941, Employer’s Quarterly Federal Tax Return. The credit can be used to offset the employer’s portion of Social Security taxes.
The Employee Retention Credit (ERC) has undergone changes under different legislation. The ERC under the CARES Act allowed for a credit of 50% of qualified wages up to $10,000 per employee for wages paid between March 13, 2020, and December 31, 2020. However, under the Consolidated Appropriations Act, 2023, the credit has been expanded to 70% of qualified wages up to $10,000 per employee for wages paid between January 1, 2023, and December 31, 2023.
A business cannot claim the ERC on wages that were paid with PPP funds that were forgiven or on wages that were used to claim FFCRA tax credits. However, a business can claim the ERC on wages that were not paid with PPP funds and were not used to claim FFCRA tax credits.
Yes, tax-exempt organizations are eligible for the ERC, with a few exceptions.
To claim the ERC, a business must maintain documentation to support its eligibility for the credit, including records of its gross receipts and qualified wages. The IRS has provided guidance on the documentation requirements for the ERC.
The ERC is available for wages paid between March 13, 2020, and December 31, 2023. However, the Consolidated Appropriations Act, 2023, extended the availability of the credit to wages paid through June 30, 2023, for recovery startup businesses.
The Employee Retention Credit (ERC) was designed to help businesses that continued to pay employees while shut down or partially shut down due to Covid-19 or had significant declines in gross receipts from March 13, 2020 to December 31, 2021. This is a complex credit that requires the expertise of a CPA firm that actively pursues this credit for this client. The IRS has warned businesses to be cautious of advertised schemes and solicitations that promise tax savings that simply do not exist without actively qualifying each potential business. Tri-Cities CPA, PLLC began developing strategies and methodologies as soon as the IRS released the guidance for the Employee Retention Credit (ERC). A common theme among our clients that now qualify for the ERC was that they did not believe they would qualify. Let us analyze your data and let us identify if you qualify and how much credit is available to you.
The Employee Retention Credit is valuable tax credits that can help small businesses retain their employees during the COVID-19 pandemic. Small businesses in Washington, Oregon, and Idaho can benefit from the ERC if they meet the eligibility criteria. Tri-Cities Tax and Accounting can help your business determine if you’re eligible for the credit and guide you through the process of claiming it. Contact us today to learn more about how we can help your business take advantage of the ERC and other tax credits and deductions available to you.
The ERC is worth up to $33,000 per employee for 2020 and up to $28,000 per employee for 2023.
You can claim the ERC on your quarterly employment tax returns. If you are eligible, Tri-Cities Tax and Accounting can help you claim the credit.
Yes, you can claim the ERC even if you received a PPP loan. However, you cannot use the same wages to calculate both the PPP loan forgiveness and the ERC.
The deadline to claim the ERC for 2020 is December 31, 2021. For 2023, the deadline is December 31, 2023.
You need to provide documentation to support your claim, such as payroll records, tax forms, and financial statements. Tri-Cities Tax and Accounting can help you gather the necessary documentation.
Falsely claiming the ERC can result in penalties and interest charges. It is important to work with a reputable tax professional, such as Tri-Cities Tax and Accounting, to ensure compliance with the law.
You can claim the ERC for each quarter that you are eligible. If you are eligible for the ERC in 2020 and 2021, you can claim it for up to eight quarters.
No, there are no restrictions on how you can use the ERC funds. They can be used for any business expense.
No, you cannot claim the ERC for employees who were furloughed or laid off. The credit is only available for employees who are still on your payroll.
No, you cannot claim the ERC for employees who were hired after the eligible time period. The credit is only available for employees who were on your payroll during the eligible time period.
The ERC is calculated based on the amount of qualified wages paid to eligible employees. Tri-Cities Tax and Accounting can help you calculate the credit.
No, you will not be taxed on the ERC funds you receive. The credit is a tax credit, not taxable income.
Delivered thousands of successful projects, optimizing tax strategies and maximizing returns for clients.
Mike Stoker
Great service and very knowledgeable of accounting and tax strategies. I would recommend Darren and his team to anyone.
Cody Humphrey
Aaron Chan
Ben Anderson
Hands down the best team for taking care if your taxes.
Gary Hawley
Local Guide
Your experienced Tri-Cities Area CPA Professionals
Darren :
Ben :
Phone :
