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Smart Accountants specializes in meticulously preparing and reviewing your Employee Retention Tax Credit to offer all-inclusive Employee Retention Tax Credit services in the US.
The Employee Retention Tax Credit (“ERTC”) was established as part of the CARES Act to incentivize employers to retain employees during a pandemic by providing a refundable tax credit against employment taxes. Subsequent legislation amended the rules governing the Employee Retention Tax Credit, including expanding eligibility to include businesses that received PPP loans and extending the credit through September 30, 2021(For recovery start-up, Dec. 31st, 2021).
If your business was adversely affected by the pandemic, you may be eligible for Employee Retention Tax Credit. Smart Accountants assist businesses throughout the ERTC process, from qualification to documentation and reconciliation, as well as compliance with new regulations.
Since after the pandemic, the Employee Retention Tax Credit is considered the peak in getting your businesses back on track, we strive to add more value to your venture by providing far-sighted ERTC services. Our Employee Retention Tax Credit services cover Qualification Analysis based on Income Reduction or Shutdown / partial-shutdown depend on federal or state governments orders, Entering Transactions, Working of Employee Retention Credit Calculation, Preparation, and Review of 941-X.
Additionally, we provide quality assurance and enable you to manage your tax ERTC efficiently. By providing timely solutions, we make managing Employee Retention Tax Credits simple for you. As ERTC regulations and updates become more stringent on a daily basis, our tax and accounting company restore the ease of handling corporate ERTC services.
Why Smart for EMPLOYEE RETENTION TAX CREDIT?
- 10+ Clients Serving:
Our team consists of highly skilled professionals who have been providing similar services to 10+ clients by now.
- 500+ ERTC Claims:
We have helped with the processing of 500+ ERTC Claims prepared.
- Always Updated:
We are always updated with the new changes coming in.
- Extensive Research:
Our team ensures extensive research before taking in a new project.
EMPLOYEE RETENTION CREDIT FAQs
1. How does the Employee Retention Tax Credit work?
Payroll tax credits for employers who are eligible for the Employee Retention Credit are available to those who pay qualified wages to their employees. The credit could be claimed against Social Security taxes under the CARES Act and CAA. Only Medicare taxes were eligible for the tax credit under the ARPA.
Quarterly tax returns are used to claim the credit which reduces the amount of money that employers have to pay in employment taxes.
- For wages paid after March 12, 2020, but before January 1, 2021, the CARES Act allowed for this credit.
- The Employee Retention Credit has been extended by the CAA until June 30, 2021.
- Until the end of 2021, the Employee Retention Credit will be further extended by the ARPA.
2. What is the amount of the credit?
For 2020, the credit was equal to 50% of the wages of eligible workers. Employees’ total compensation for all quarters cannot exceed $10,000 in qualified pay. There is a $5,000 limit on each employee’s tax credit.
For 2021, the credit covers 70% of the wages that qualify. Qualified salaries for the first two quarters of 2021 can’t exceed $10,000 for each employee.
3. Who qualifies for the Employee Retention Tax Credit
For 2020, Businesses that were in operation during 2020 and suffered one or more of the following:
- A government order limiting trade, travel, and group gatherings as a result of COVID-19 restrictions; or
- If at the beginning of a calendar quarter, the employer’s gross receipts are less than half what you were in the same calendar quarter in 2019, then there has been a considerable fall in gross receipts. Gross receipts of the employer must be at least 80 percent of the same quarter in 2019 to cease the severe fall (less than 20 percent reduction).
For 2021, however, the standard for evaluating whether gross receipts have decreased significantly has been tweaked slightly for 2021. A trade or business that was in operation in 2021 and experienced one of the following conditions is considered an eligible employer:
- A government order limiting trade, travel, and group meetings as a result of COVID-19 restrictions; or
- Gross receipts that are less than 20 percent of what you were in the comparable quarter of 2019 are considered to be a “significant decrease,” which begins at the beginning of the calendar quarter. Businesses might choose to employ a test from the previous quarter in order to qualify for the current one. Employers would be considered to have met the test for the second quarter of 2021 if you experienced a 20 percent decrease in the first quarter of that year.
4. What are the qualifying payroll costs?
- Only salary and health care expenditures paid to employees who are not performing services during the relevant quarters are eligible for large employers, defined as those with more than 100 employees. Employers who pay their workers not to work get all the credit!
- All salaries and health care expenditures paid during the foregoing periods are eligible to pay for a small employer (under 100 employees), even if the employee continued to execute services.
Except for the new definition of a small employer, the rules remain the same as in 2020. It is now possible to have up to 500 employees instead of the previous cap of just 100.
5. What if you are the recipient of a forgivable PPP loan?
Taking a PPP loan to fund payroll expenses is no longer an obstacle to using the ERC, as previously noted. In order to avoid double-dipping, both the ERC and the forgiving PPP loan cannot be utilized to cover the same payroll costs! Employers who have already filed for and got forgiveness of the PPP will have their calculations made more difficult as a result of this. Employee-by-employee determinations must be made to ascertain which earnings, including health care costs, are eligible for ERC and which were forgiven under the PPP loan program. For people who already got PPP loan forgiveness, IRS Notice 2021-20, released in March of 2021, provides examples of the computation.
Smart Accountants Financial, Tax, and Corporate ERTC services
- Qualification Analysis based on Income Reduction Entering Transactions/Shutdown
- Workings of ERC Calculation
- Preparation/Review of 941-X
We can untangle the EMPLOYEE RETENTION TAX CREDITS for you! Schedule a call with our experts now!
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