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The new Employee Retention Tax Credit for covid 19 Impacted Employers.
The Employee Retention Credit (“ERC”) provides a refundable payroll tax credit for qualified wages paid to employees during 2020 and 2021
The Employee Retention Tax Credit (ERTC) is a payroll tax credit and not an income tax credit.
The ERTC tax credit time frame is March 13, 2020, to September 30, 2021.
PPP loans do not exclude businesses from ERC tax credit opportunities. Although the same wages that were used for the PPP loan forgiveness application cannot be used to calculate the ERC credit.
Maximum amount of credit is up-to $26,000 per employee.
To qualify for the ERC, a business must have experienced a significant decline in gross receipts in 2020 and/or 2021 over the same period in 2019
Your business may qualify for the ERC tax credit if compared to 2019 your business lost 20% revenue in the first 3 quarters in 2021.
Your business may qualify for the ERC tax credit if compared to 2019 your business lost 50% revenue in any quarter in 2020.
Your business may qualify for the ERC tax credit if had impacts due to a full or partial suspension of operations due to government orders.
ERTC is considered taxable income unlike the PPP Loans that were tax free. Once you apply for the credit, you will have to amend your business and personal income tax returns and pay the tax on the ERC claimed.
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