Updated: Feb 13
The continuing saga of Congress’ attempt to help small businesses impacted by the COVID-19 shutdowns in various states, including Nevada.
The “Employee Retention Credit” is up to of 50% of certain wages paid per employee for the first $10,000 of wages paid (including certain health plan expenses). Nothing to sneeze at.
So who qualifies? Any small business OR exempt organization (churches, synagogues, art centers, etc.) who…
Had a full or partial suspension of operation of their trade or business during any calendar quarter because of government orders limiting commerce, travel, or group meetings due to COVID-19
Had a significant decline in gross receipts, (The CARES Act defines “significant decline in gross receipts” as BEGINING … “On the first day of the first calendar quarter of 2020 for which an employer’s gross receipts are less than 50% of its gross receipts for the same calendar quarter in 2019.” and ENDING … “On the first day of the first calendar quarter following the calendar quarter in which gross receipts are more than 80% of its gross receipts for the same calendar quarter in 2019.”)
The credit applies to gross wages paid during this period or any calendar quarter in 2020 in which operations were totally suspended.
There is a qualifier to employers with more than 100 employees verses employers with less than 100 employees. Too long to go over here. Consult with your tax professional for more information.
There is a limitation to receiving this credit. No credit is allowed for employers who received an SBA Interruptions Loan under the PPP loan program, OR if the employer used these wages to qualify for the Sick and Family Leave under the Families First Coronavirus Response Act OR the Medical Leave Credit under Code Section 45S, OR any employees used by the employer in a Work Opportunity Tax Credit under Code Section 51.
Up to now, the way to claim this credit was in reducing the employer share of Social Security and Medicare taxes normally paid by payroll tax deposit owed for quarterly form 941s in 2020. But now eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.
So, there you have it. SIMPLE right? Don’t you love it when Congress makes things so clear? If you think your business might qualify for this credit, contact your CPA tax preparer ASAP. The opportunity to claim this credit runs out on January 31st 2021.
Did you hear? 2 Kings 6:26 says, “Then as the king of Israel was passing by on the wall, a women cried out to him saying, ‘Help, my lord O king!”