ERC - Employee Retention Credit $$$
Yes, you should look into the ERC. The fee will be approximately 20% to the ERC processing company. Most won’t need their fee until your IRS refunds arrive. Some want their fee up front.
Who can I use to process ERC claims?
- Innovation Refunds… www.innovationrefunds.com
- Payroll service companies such as Paychex, Paytime etc.
Caution:
- Internet/radio claims of $25k per employee... just hype. Don't expect this much.
- Most of the companies will only deal with you if you have 5 employees or more excluding the owner.
- A 100% owner of a corporation/LLC does not qualify for his own wages.
- If you had a PPP loan, those wages used to qualify for the PPP don’t qualify.
- The IRS refunds are taxable corporate income for both federal and PA.
- If you get refunds from the IRS (usually for 2020 and 2021), I would have to amend both the personal and corporate tax returns for both years. Our fee for that is approximately $500 per amended tax return x 8 required amendments = $4k grand total for 2 years.
- Amended 2020 federal corporate return
- Amended 2020 PA corporate return
- Amended 2020 federal personal return
- Amended 2020 PA personal return
- Amended 2021 federal corporate return
- Amended 2021 PA corporate return
- Amended 2021 federal personal return
- Amended 2021 PA personal return
- Each of the above returns has an increased chance of audit. The IRS has announced plans to audit the ERC submissions. I have no idea yet to what extent. So try to use a reputable company based on online reviews.
Example of $20,000 total ERC refunds…
$20k received from IRS
($4k to ERC company)
($4k to Dave to amend 8 tax returns)
($5k income taxes due)
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Net $7k left for you
So you have to receive enough to make it worthwhile.
And there is a risk that the IRS audits your ERC claim and disallows…and makes you repay the $20k (then you would have to pay me another $4k to amend all the tax returns back to their original status).
It’s a complicated set of rules, but generally you qualify if your 2020 or 2021 sales decreased compared to pre-Covid 2019. You compare the years by quarter (2nd qtr 2020 vs 2nd qtr 2019; or 2nd qtr 2021 vs 2nd qtr 2019). The ERC processing company will determine if you qualify.
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Archives for Covid-19 2020/2021
2022 Covid-19 aid
CARES ACT &
Families First Coronavirus Response Act
updated 05/23/22... new Cumberland County Recovery Grants... https://www.ccpa.net/CCRG
Highlights of 05/17/21 update...
IRS, Treasury Announce Families of 88% of Children in the U.S. to Automatically Receive Monthly Payment of Refundable Child Tax Credit. IRS and Treasury announced the increased CTC payments will be made on the 15th of each month starting 07/15/2021. Eligible families will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and above. The American Rescue Plan increased the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children between ages 6 and 17. The increased amounts are reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.
www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021
Highlights of 04/29/21 update...
PUA has requested of all filers to submit proof of their self-employment. Click black button below for more info.
Highlights of 03/30/21 update...
PPP deadline is extended to 05/31/21. sorry, they ran out of money 05/15/2021.
Highlights of 03/11/2021 update...
$1,400 stimulus payment details. Click black button below.
Highlights of American Rescue Plan... $1,400 stimulus payments for self and every dependent regardless of age; 2020 non-taxable unemployment up to $10,200; no more 2020 repayments of Marketplace subsidy if your income is too high; daycare flexible spending account max increases from $5k to $10,500. Some of these provisions require amended returns if you have already filed your 2020 tax return.
Highlights of 02/24/21 update...
PPP deadline is 03/31/21. Starting 02/24/2021, businesses filing for PPP loans with fewer than 20 employees will be prioritized for application processing with the SBA for a period of 2 weeks ending 03/09/2021.
LOANS FOR A SCHEDULE C TAXPAYER ARE NOW BASED ON GROSS INCOME RATHER THAN NET
Full details are not known yet. This should result in much more PPP loan proceeds. This is for schedule C filers only apparently.
Prior to this new development, a schedule C taxpayer would base a PPP loan on their Schedule C net income. The breaking news is that now a Schedule C PPP loan will be based on GROSS INCOME (and no, I do not know if the Gross receipts are reduced by any expenses, including Returns and Allowances).
Highlights of 01/27/21 update...
- PUA web site is giving everyone trouble... not working correctly, not allowing certification of back weeks.
Here are some hints:
1) After re-opening a claim, you apparently have to wait 1 week before you can do the weekly certifications.
2) Request backdating... if you are looking to have the effective date of your claim earlier than the week in which you opened your claim, call PUA at 855-284-8545 or send an email to [email protected] with a subject line "BACK DATE REQUEST". In the email body you have to say when and how Covid-19 affected your self-employment and wish weeks you wish to claim.
3) Example back date email: I want to backdate my unemployment claim to March 15th because I had temporarily closed my business until June 6th due to the Governor's closure orders. Please note I don't need to claim unemployment as of June 8th because I re-opened my business as of June 8, 2020.
From PUA...
Today (01/27/2021), the Department of Labor & Industry provided an update on the federal Pandemic Unemployment Assistance (PUA) program.
Issues Resolved
Highlights of 01/20/21 update...
- PPP loan forgiveness... The new simplified forgiveness form is here for loans under $150k. Click the PPP button below for info. Forgiveness applications are not due until 10 months after the end of your 24 week measurement period.
Highlights of 12/28/20 update...
- New stimulus package... Web site is updated based on info known to date... stimulus payments, PPP, EIDL, PUA Unemployment. More to come as details unfold. DETAILS MAY CHANGE as Congress works to make additional changes.
$1,400 Stimulus payments
Unemployment for the self-employed...
schedule C filers, Corporate shareholders, partners, multi-member LLC owners.
schedule C filers, Corporate shareholders, partners, multi-member LLC owners.
SBA loan with "up to $10k" grant.
If you receive this loan/grant... email our office so we can tell you what to do next.
If you receive this loan/grant... email our office so we can tell you what to do next.
PPP#1 and new PPP#2 loans
Paycheck Protection Program loans for small businesses.
If you receive this loan... email our office so we can tell you what to do next.
Paycheck Protection Program loans for small businesses.
If you receive this loan... email our office so we can tell you what to do next.
updated 05/23/22... new Cumberland County Recovery Grants... https://www.ccpa.net/CCRG
PA grants are expired... Governor Wolf announces $225 million grant program for small businesses impacted by Covid-19.
PA grants are expired... Governor Wolf announces $225 million grant program for small businesses impacted by Covid-19.
Skip... employers won't do this.
Employers can apply for this grant for employees who make less than $20/hour and are in certain eligible industries.
Employers can apply for this grant for employees who make less than $20/hour and are in certain eligible industries.
Other Covid-19 aid:
2020 Tax deadline changes
- April 15th filing & payment deadlines are postponed until 07/15/2020 for Federal, PA and Local.
- 1st quarter Federal & PA estimated tax payment deadlines are postponed until 07/15/2020.
Medical Provider HHS Stimulus payments
Rebate is based upon Medicare fee for service billings
https://ceriniandassociates.com/healthcare-payments-hhs-stimulus/
PA Industrial Development Authority (PIDA) Working Capital Loan
- CLOSED - NO MORE FUNDS AVAILABLE
Emergency Retirement Plan distributions
- no 10% penalty on early withdrawals up to $100k if used for Covid-19 reasons.
- you can delay the income tax on the distribution over 3 years.
- no RMD required for 2020.
Small employers must pay certain employees at home...
- N/a - if your business is closed or you laid off employee prior to them submitting sick leave.
- If you have employees, you generally need to post this poster in your workplace:
- Employer receives tax credits which pay for wages (see below)
- Effective 04/01/20 small employers must pay sick leave to most employees not able to work due to Coronavirus issues (Coronavirus illness for employee or family member, daycare issues).
- Employers have 30 days to comply.
- click here... FAQs