The ERTC (Employees Retention Tax Credit) is a tax credit offered by the United States government to help businesses that retained their employees during the COVID-19 pandemic. Some important things to know about the ERTC include:
• The credit is equal to 50%-70% of qualified wages (up to $10,000 per employee) and is available to employers who have experienced a major decline in gross receipts or have been forced to completely or partially suspend operations due to COVID-19 related restrictions.
• The credit is available to employers of all sizes, including non-profits, and can be claimed on a quarterly basis.
The credit was first implemented in the CARES act and was extended to December 31, 2021 under the. American Rescue Plan Act of 202.1
Infrastructure Investment and Jobs Act (IIJA) retroactively amends section 3134 to limit availability in the fourth quarter of 2021 to a recovery startup business.
• The credit is refundable, which means that if the credit exceeds the employer's tax liability, the employer will receive a refund for the difference.
• Employers may not claim both the ERTC and the Paycheck Protection Program (PPP) for the same wages. Employers that received PPP loans must reduce their ERTC by the amount of PPP loan forgiveness they received.
• Employers may have to provide documentation to support their claim of the credit. Employers should consult with a tax professional to make sure they are taking full advantage of the credit and to ensure compliance with the rules and regulations surrounding the credit.
How Certified Public Accountant (CPA) helps you in ERTC?
A Certified Public Accountant (CPA) can assist you navigate the complexities of the Employees Retention Tax Credit (ERTC) and ensure that you are taking full advantage of the credit. A CPA can assist you with the following:
Eligibility determination: A CPA can help you determine if you are eligible for the ERTC by assessing your business's decline in gross receipts and determining if your operations were fully or partially suspended due to COVID-19 related restrictions.
Calculation of the credit: A CPA can help you calculate the amount of the credit you can claim by determining the eligible wages and the number of employees for each quarter.
Documentation: A CPA can help you gather and organize the necessary documentation to support your claim of the ERTC.
Filing and compliance: A CPA can help you file for the credit and ensure that you are in compliance with the rules and regulations surrounding the ERTC.
Maximizing the benefit: A CPA can help you maximize the benefit of the ERTC by providing guidance on how to allocate the credit to your business's various income tax obligations and by identifying other tax credits or deductions that you can claim in conjunction with the ERTC.
PPP and ERTC coordination: A CPA can assist you in coordinating the ERTC with other COVID-19 relief programs, such as the PPP (Paycheck Protection Program), to ensure that you are not double-dipping.
Changes in regulations and laws: A CPA can help you stay informed of the changes in the regulations and laws related to the ERTC and how it will affect your business.
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