Lets talk first about Employee Retention Credit Gross Receipts Test :
Our group here what do these guys doing everyone in this room is helping teach people about ERC and uh always offer a beautiful breakfast and have people really learn more about the program we should head to the space where we have the ability to show a few of the checks that we are getting for companies and I want to see that what is this this is uh numerous millions of dollars actually Kevin numerous countless dollars so these are duplicate copies of the letters that go to customers verifying that the check is on the method I imply you know if you just begin to look at a few of these here I mean this one’s 8 million this one is 1.1 million 1.7 million 1.4 million I mean it’s just I imply think about how many actual customers that went through the program yeah this is the very end this is the party at the end when the check is validated the numbers are verified and the check is on the mail in the mail from the IRS heading to the consumer so that’s how you’re able to track it you understand when you
receive this you understand the check is opted for sure which’s when they pay so they do not pay anything till they in fact get the cash they do not pay bottom line Wonder trust anything till this letter is validated the check is on the way they transfer it into their checking account and they can genuinely rely on Wonder trust that the process has actually been ended up and the number of you believe you have actually processed since you began this we’re about 35 000 of these for
about six billion dollars wow so plainly they understand what they’re doing and that’s what you need you require professionals on the other end of the phone to process this and get it to where you get among these that’s what matters all right Mr Terrific here you’re at my YouTube channel we’re talking about something really essential today the staff member retention credit which the majority of you have actually never ever become aware of I definitely hadn’t become aware of it till extremely just recently and learned a lot about it because this is probably the most affordable expense of capital for any small business anywhere
anytime if you have staff members between 5 and five hundred so I have actually got the expert with me this is Josh Fox he’s the founder and CEO of bottom line Ideas they’re the biggest processor of these ERC credits this is a 170 page program so it’s difficult this isn’t like PPP we simply call your bank supervisor and state provide me a loan it doesn’t work there’s not a loan it’s an application and Josh is going to inform all of us about it and how to get it and why I’ve ended up being yes the Ambassador and paid representative for this I love this program it’s going away very soon you got to find out all about it let’s talk worker retention credit Josh Fox what is an ERC let’s just start there so during the Trump Administration when President Trump was enacted they came up with the cares Act and the cares act used services 3 opportunities you had the PPP loan you had the eidl loan and you had the ERC tax refund and nearly everybody it makes a big difference right there 2 of them are loans and one’s a refund exactly so the ERC is a refund that’s.
correct the cash cash payroll tax refund all right go on sorry I simply have to make certain we got that point I imply that’s a huge difference a loan versus money cash I like cash money that’s what we’re talking about all right 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 initial cares Act is the ERC and yes Kevin it is a stunning hard check in the mail where you get real money from the internal revenue service all right so let’s speak about how it works since it seems like to me if it’s a if it’s staff member retention credit that individual needed to be a worker so I’m going to make the Assumption this money is not for the owner not for individuals on the cap table not for investors it’s for workers right you needed to have actually owned an organization but it’s based upon you having W-2 workers in America not 10.99. so as long as you had W-2 staff members and you paid federal payroll taxes that’s why you would be qualified so you have to be on payroll in 2020 on the W-2 and you need to be on payroll for the first 6 months of 2021 on the W-2 right so there were 6 quarters the program was open well walk us through the 6 quarters so you had quarters 2 3 and 4 of 2020 and you had quarters one two and 3 of 2021. all right so that’s how it’s measured you need to be on the W-2 during that duration now let’s talk my favorite part money how much can you return per worker that was on a W-2 in those six quarters so the estimation in 2020 to be exact Kevin is 50 of the staff member’s income to a maximum of 5 thousand dollars per employee 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 happen um they simply changed the rules in.
2021 versus due to the fact that the mayhem of the pandemic so they wanted to even get more to keep those workers on payroll 100 so if you can get 5 000 per person Max in twenty that was 50 in 2020 approximately 5 thousand Max and after that what takes place 21 000 Max in 2021 oh that’s how you create twenty 6 thousand twenty one thousand to twenty twenty one plus five thousand in twenty twenty that’s twenty 6 thousand dollars per employee that is because that’s a lot of cash it is now there’s a caution here the PPP cash would have to be decreased from the twenty 6 thousand dollars so if you took PPP loan one and PPP loan 2 you would minimize the 26 000 so what we’re seeing on average Kevin is if you took PPP cash somewhere around 10 thousand dollars a person so let’s state hypothetically you owned a dining establishment in New York City where I’m from and you had a hundred employees and you took PPP money you would still get a million dollar in the mail from the internal revenue service so it’s substantial obviously now the huge concern is why does no one know about this due to the fact that appearance when I first became aware of this when I first met Josh you know I’ve got lots of investments in lots of business I’m a significant advocate for entrepreneurship in America and make numerous numerous financial investments in entrepreneurs of which numerous suffered through the pandemic when I initially became aware of this I called BS I don’t believe it since I use the PPP we went through the money center Banks to get it it was extremely easy to do we had our CEOs call the banks they got their loans and that were well been worthy of and we used them sensibly to survive during the pandemic so when I heard about this I said nah it can’t be true however when I dug around I even contacted us to my political leader pals Governor Senators they didn’t learn about it I mean that’s how you know that’s how false information is that there’s no information out there then a lot 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 no one understand about the employee retention credit you know what’s fascinating you’re discussing the banks Kevin because in the PPP loan procedure the federal government made it extremely clear that if you desired a PPP loan you would call Wells Fargo Citibank Bank of America any of the big banks in our country and they would process procedure in Canada a pre-pp loan there’s no loans in Canada by the way it’s just procedure procedure that’s all um and here there was chaos due to the fact that keep in mind in the initial cares act you might not do both programs so if you had done PPP you might not do ERC in the original program and when they changed the law in 2021 the banks were not doing ERC because it’s not alone so you’re getting a tax refund so the government never ever made it clear to anyone about how to.
do this does your CFO understand how to do this not actually she or he’s never ever done it previously do the banks do it nope the banks don’t do it the payroll companies yeah some of them are doing it as a payroll company your accountant no your accounting professional’s never ever done this prior to unless you have an account that entered into this business and bottom line my firm Kevin has been 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 business so a lot of our big big corporate clients have actually dealt with bottom line to recover other government programs we’ve done sales tax and utilize tax joblessness tax work chance tax credits research and development tax credits unclaimed property property tax all of these other government programs.
The worker retention tax credit is a broad based refundable tax credit developed to encourage.
employers to keep employees on their payroll. The credit is 50% of approximately $10,000 in salaries paid by an.
Due to the fact that of COVID-19 or whose gross receipts, company whose business is fully or partly suspended.
decrease by more than 50%.
Schedule.
1. The credit is available to all employers no matter size consisting of tax exempt organizations. There are.
just 2 exceptions: (1) state and city governments and their instrumentalities and (2) small.
services who take Small Business Loans.
2. To certify, the company needs to meet one of two alternative tests. The tests are calculated each.
calendar quarter– Either.
o the employer’s service is fully or partially suspended by federal government order due to COVID-19.
during the calendar quarter or.
o the employer’s gross receipts are below 50% of the similar quarter in 2019. Once the.
employer’s gross invoices exceed 80% of a comparable quarter in 2019 they no longer certify.
after completion of that quarter.
Computation of the Credit.
The quantity of the credit is 50% of the certifying salaries paid up to $10,000 in total.
It is effective for wages paid after March 13th and before December 31, 2020.
The definition of qualifying wages differs by whether a company had, typically, more or less than.
100 employees in 2019.
Companies that specialize in ERC filing help typically provide know-how and assistance to help organizations browse the complicated process of declaring the credit. They can provide numerous services, consisting of:.
How is the employee retention credit calculated? Employee Retention Credit Gross Receipts Test
Eligibility Evaluation: These business will evaluate your organization’s eligibility for the ERC based on aspects such as your industry, revenue, and operations. If you satisfy the requirements for the credit and recognize the maximum credit quantity you can declare, they can assist identify.
Documents and Estimation: ERC filing services will assist in gathering the essential documentation, such as payroll records and monetary declarations, to support your claim. They will also assist calculate the credit amount based on qualified incomes and other qualifying expenditures.
Retroactive Claim Evaluation: If you are eligible to claim the ERC for prior quarters, these companies can review your previous payroll records and financials to identify possible opportunities for retroactive credits. They can help you amend prior tax returns to declare these refunds.
Filing Help: Business focusing on ERC filings will prepare and submit the essential types and documentation on your behalf. This includes completing Form 941 or any other required tax forms.
Compliance and Updates: ERC regulations and assistance have developed over time. These companies remain upgraded with the current changes and ensure that your filings adhere to the most present standards. If the IRS requests additional details or performs an audit associated to your ERC claim, they can also offer ongoing support.
It is very important to research study and veterinarian any company offering ERC filing support to ensure their trustworthiness and proficiency. Look for established firms with experience in tax and payroll services, or think about connecting to trusted accounting firms or tax professionals who offer ERC submitting support.
Keep in mind that while these companies can offer valuable help, it’s constantly a good concept to have a fundamental understanding of the ERC requirements and process yourself. This will help you make notified decisions and guarantee precise filings.
The Worker Retention Credit (ERC) is a refundable tax credit presented by the U.S. federal government as part of COVID-19 relief steps. The goal of the ERC is to encourage services to keep and pay their workers throughout the pandemic, even if their operations have been impacted.
Here are some key points about the ERC:.
Eligibility: The ERC is readily available to eligible employers, consisting of for-profit companies, tax-exempt organizations, and particular governmental entities. To certify, employers need to meet one of two requirements:.
The business operations were completely or partly suspended due to a federal government order related to COVID-19.
Business experienced a significant decrease in gross receipts. As discussed earlier, for 2021, a substantial decrease is defined as a 20% decrease in gross receipts compared to the same quarter in 2019. For 2022 and beyond, a significant decline is defined as a 20% decrease in gross invoices compared to the exact same quarter in 2019, or a 20% decline in gross invoices compared to the immediately preceding quarter.
Credit Quantity: The ERC is a refundable tax credit that offsets the company’s share of Social Security taxes. The credit amount is equal to a percentage (as much as 70%) of qualified incomes paid to staff members, including certain health insurance expenditures. The maximum credit per worker is $7,000 per quarter in 2021 and $10,000 per quarter in 2022 and beyond.
Interaction with PPP: Initially, companies that received a Paycheck Defense Program (PPP) loan were not eligible for the ERC. Legislation passed in late 2020 and extended in 2021 permits organizations to claim the ERC even if they received a PPP loan. Nevertheless, the same wages can not be utilized to declare both the PPP loan forgiveness and the ERC.
Retroactive Provision: The ERC has actually been retroactively broadened and enhanced, permitting qualified employers to declare the credit for qualified wages paid as far back as March 13, 2020. This retroactive arrangement supplies an opportunity for services to modify prior-year income tax return and receive refunds.
Claiming the Credit: Companies can claim the ERC by reporting it on their employment income tax return, usually Type 941. The excess can be reimbursed to the employer if the credit exceeds the amount of work taxes owed.
It is necessary to note that the ERC arrangements and eligibility requirements have actually progressed over time. The very best strategy is to talk to a tax professional or go to the main IRS website for the most current and in-depth details regarding the ERC, including any recent legislative modifications or updates.
To receive the ERC, a business must meet one of the following criteria:.
Business operations were completely or partly suspended due to a government order related to COVID-19.
The business experienced a considerable decline in gross receipts. For 2021, a substantial decrease is specified as a 20% decrease in gross invoices compared to the same quarter in 2019. For 2022 and beyond, a considerable decrease is defined as a 20% decline in gross receipts compared to the exact same quarter in 2019, or a 20% decrease in gross invoices compared to the right away preceding quarter.
The ERC is available to organizations of all sizes, including tax-exempt organizations, however there are some exceptions. For instance, government entities and companies that received a PPP loan might have restrictions on declaring the credit.
The procedure for claiming the ERC includes finishing the essential forms and consisting of the credit on your employment tax return (typically Kind 941). The exact time it requires to process the credit can differ based on a number of factors, consisting of the intricacy of your service and the work of the internal revenue service. It’s suggested to talk to a tax professional for guidance particular to your situation.
There are a number of business that can help with the process of claiming the ERC. Some popular business that use support with ERC claims consist of ADP, Paychex, Deloitte, and Ernst & Young.
Please keep in mind that the info provided here is based on basic understanding and may not show the most current updates or modifications to the ERC. It is very important to speak with a tax expert or visit the main internal revenue service site for the most up-to-date and precise details concerning eligibility, declaring treatments, and readily available help.
Less than 100. If the company had 100 or fewer staff members typically in 2019, then the credit is based.
on wages paid to all staff members whether they really worked or not. In other words, even if the.
employees worked full time and got paid for full time work, the employer still gets the credit.
Greater than 100. The credit is if the employer had more than 100 workers on average in 2019.
enabled just for earnings paid to staff members who did not work during the calendar quarter.
In both cases, “salaries” consists of not simply cash payments however likewise a portion of the cost of company.
supplied healthcare. Employee Retention Credit Gross Receipts Test
Payment.
Employers can be instantly reimbursed for the credit by decreasing the amount of payroll taxes they.