ERTC Basics EXPLAINED - ERTC 2020 and 2021 - Are you eligible?
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- เผยแพร่เมื่อ 30 ก.ค. 2024
- The Employee Retention Tax Credits (aka ERTC of ERC) have brought a lot of confusion to CPAs and business owners alike. The program changed again when the Consolidated Appropriations Act was passed in December of 2020. However, these changes opened up new opportunities for small business owners to claim ERC in both 2020 and 2021.
Brittany Malidore from Larson Gross CPA firm came on the channel to talk to us about ERTC basics and explain the 2020 and 2021 programs, eligibility, and everything we need to be aware of right now!
Are you eligible? Don't leave these once-in-a-lifetime tax credits unclaimed!
Larson Gross is a CPA firm located in WA state, but serves clients all over the country. They are providing ERTC services if you want to engage them. Note that this is NOT a promotional or paid interview, but we've brought on Brittany as the firm is rising to the occasion to help small business owners through this process.
Follow Larson Gross LinkedIn page here for ERTC resources: / larson-gross-cpas-&-co...
Reach out to Brittany directly via email: bmalidore@larsongross.com
Find Flowcharts for understanding eligibility: / larson-gross-cpas-%26-...
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Hannah Smolinski is a #CPA and the Founder of Clara CFO Group.
Find out more about Clara CFO Group at claracfo.com/
Disclaimer: This video is intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Clara CFO Group, LLC is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience.
I wish I could like this 10 times for you. The thing I like about your channel is that you play it straight and narrow. It's refreshing to have that perspective when some other you tubers try to stretch the boundaries. Its good to try and stretch, but it's also good to get advice and perspective from those who clearly stay in the lines; and try to do their best to do so.
Thank you!! Thanks for watching!
Thanks Hannah & Brittany!
Another great video! This really helped explain ERTC!
So glad this helps!
Super helpful and timely! Thank you!
Glad it was helpful! thanks for watching friend!
Thank you for the best information such as hard times.
Glad it was helpful!
Excellent Resource. I will listen again.
Thanks for watching!
For gross receipts, is it based on cash or accrual basis? My sales for Q4 experienced 20% decline compared to q4 2019. However I made deposits in Q4 from previous quarters sales. If I include those deposits then I don’t meet 20% decline. Any guidance? Another question, if you use the election of Q4 2020 to determine if you qualify for ertc in Q1 2021, then what happens for Q2 2021? Which quarter do you look at to determine eligibility for Q2 2021? Thx
Great video thanks
Thanks for watching!
Question. I received forgiveness for first ppp loan. The bank I got my second draw ppp from is different from 1st bank and is signed up with sba for forgiveness. The 2nd bank sent my info as first draw to sba instead of second draw. I submitted for forgivness anyway because u could not change the preentered data. Do u think it will still be forgiven? Any info will help.
Is there a way to correct errors in 941x? I realized I submitted the wrong info in IRS, in Part 1 it should be CLAIM not ADJUSTED EMPLOYMENT TAX RETURN. How should I proceed with this scenario?
Hi Hannah! First of all I want to say your videos about the PPP loan have been very helpful for me. Thank you!
I have a question, I submitted an application for the first draw and I used a draft of my schedule C and I used line 31. My accountant recommended that I contribute more to my SEP IRA to lower my tax bill... now when I finalize my taxes my schedule C will change from the draft I submitted but it won’t materially change the number for line 31 and the calculation will be the same. Is that ok?
Thanks!
Hey - thanks for watching! Glad I can be helpful! So....there is a rule that says that you can't get forgiven any MORE than what you should have received (so that would be based on your final Schedule C). However, we are waiting to see if the gross income calculation can be used for forgiveness....which may help you and allow you to get the whole amount forgiven. We are waiting on details and guidance on that though.....so stay tuned!? I am sorry that's not clearer! BTW - I am a new subscriber of your channel!
@@ClaraCFO you’re very welcome! Your PPP videos have been very helpful and made me go for the PPP loan. Thank you for subscribing to my channel as well. So my draft schedule C and my actual one that will be filed will have a number in line 31 that would be above of the maximum allowed for a $20,833 loan.... so I think I should be fine right?
Yes! You are good!
@@ClaraCFO awesome! That’s what I thought. Thanks!
Can’t wait to have it forgiven. Basically going to pay myself $2084 over 10 weeks (2.5 months) and that’s proof of payroll. And for first draw I don’t have to prove loss of income or anything correct?
Just feels like there has to be a catch... otherwise that’s a lot of free money on the table for many small businesses and sole proprietors
Section 207(d)(2) of the Consolidated Appropriations Act gives businesses - for 2021 only - the option to elect to satisfy the gross receipts test by looking at the immediately preceding calendar quarter, and comparing that quarter to the corresponding quarter in 2019. To illustrate, an employer who could not satisfy the gross receipt test in Q1 of 2021 could nonetheless have an eligible quarter for that stretch of time by electing to compare gross receipts in Q4 of 2020 to Q4 of 2019. If there is a drop of more than 20% quarter-over-quarter, Q1 of 2021 will be an eligible quarter.
Brittany reiterates this alternative qualification method for ERTC 2021 at 28:52.
Thanks Dan!
👍KEEP UP THE GREAT WORK BEAUTIFUL!😉...THANKS!👌
Great video!
I have a question, if a PEO runs my payroll, they should be in charge of this process? or do I have to fill the forms?
They will not automatically do this for you. You will need to ask if they can be involved in helping file the 941 or the amended 941.
Thanks for the content. I've been following your videos from the start of the pandemic. It would be tremendously helpful if you could insert bookmarks for subjects or questions so that we can get the information that we need asap. For example, I really want to know if my business is eligible before committing to a 40 min interview. Please and thanks!
Hey Eduardo - follow my tiktok channel for shorter updates! It's simply not a yes or no answer, so there must be some discussion. There's no need to watch the video on this since there is no presentation - listen like a podcast! Thanks for the feedback though - I take it with consideration!
great video!!!!!!!!
Thank you! Make sure you are up to date on ERTC rules. This video is a bit outdated!
For S Corps the list of employees related to the owner omits spouses. Are spouse's wages included for ERC?
No, no family members.
Family attribution rules of 267(c) ruin ERC for >50% owners/spouses. You can't claim the wages of these owners once you walk through the law.
The key problem is that there is (almost) always more than one >50% owner. This results because ownership attributes from the owner to their spouse, siblings, ancestors, and descendants under 267(c). We end up with the own themselves and these relatives all being treated as >50% owners. Therefore we have a relationship that is prohibited for the direct owner - ie the direct owner is the son of the indirect owner and therefore disqualified for ERC. These articles explain the problem in more detail:
evergreensmallbusiness.com/when-owner-wages-become-ineligible-for-the-employer-retention-credit/
www.currentfederaltaxdevelopments.com/blog/2021/4/3/tax-advisers-area-51-employee-retention-credit-and-majority-shareholders
www.tomtalkstaxes.com/p/tom-talks-taxes-april-30-2021
Is there a deadline for completing the 941X for the 2020 ERTC
I am trying to determine is part time employees wages are eligible for the ERTC. I have less than 100 employees and have paid all my employees throughout the pandemic. I am a bar and restaurant and most of my employees are part-time, most do not get 130 hours a month. Can I include the part-time employees wages for the credit? I appreciate the feedback. Thanks
Yes, they are.
Hey Clara. At 11:23 she says you are not refunded more than what your employer tax liability is. Is that right? It contradicts what you posited in your preceding question to her. I thought that was the whole idea of it being refundable. Thanks!! -Omar
I think what she was meaning is that you won't get refunded more than what you are due from your qualified wages. I'm sorry, I see how that was confusing. You will get refunded back excess.
@@ClaraCFO thanks, that's reassuring:)
I am the 100% owner of S corp. Only one employee, myself.
Can I claim ERTC on my W2 wages? I see the restrictions in IRS FAQ for son/daughter/relatives, not on owner. Can you please clarify/provide your opinion?
No I don’t think you can.... it’s only for employees/employee payroll. But I would double check.
Family attribution rules of 267(c) ruin ERC for >50% owners/spouses. You can't claim the wages of these owners once you walk through the law.
The key problem is that there is (almost) always more than one >50% owner. This results because ownership attributes from the owner to their spouse, siblings, ancestors, and descendants under 267(c). We end up with the own themselves and these relatives all being treated as >50% owners. Therefore we have a relationship that is prohibited for the direct owner - ie the direct owner is the son of the indirect owner and therefore disqualified for ERC. These articles explain the problem in more detail:
evergreensmallbusiness.com/when-owner-wages-become-ineligible-for-the-employer-retention-credit/
www.currentfederaltaxdevelopments.com/blog/2021/4/3/tax-advisers-area-51-employee-retention-credit-and-majority-shareholders
www.tomtalkstaxes.com/p/tom-talks-taxes-april-30-2021
I'm also a little confused about the discussion regarding wages paid to part time employees around 32:25. The IRS FAQs number 48 explaining qualified wages states: "For an Eligible Employer that averaged 100 or fewer full-time employees in 2019, qualified wages are the wages paid to ANY EMPLOYEE during any period in the calendar quarter in which the business operations are fully or partially suspended due to a governmental order or any calendar quarter the business is experiencing a significant decline in gross receipts." And so if you're a small business with several part time employees, it would seem that wages paid to those part time employees would qualify. Sorry to post two questions on this one video, but these are important to my businesses. I own a small cafe and a bakery. Thanks again!
I edited the time....actually 32-33 minutes
I filled out and faxed 7200 over a month ago (January 2021 form) .... no word or check from IRS .... anyone receiving 7200 credit checks from IRS??
Similarly sent in 941X for Q2 2020 for ERC .... have not gotten anything on that from IRS yet ... but I was mentally prepared that that may take a while ... but the faxing of 7200 ... I thought the intent was to get that $$$ to struggling businesses ASAP ... I sure could use it and would love to hear of other's 2021 7200 IRS responses with credit checks
I have also been hearing of super long wait times. I will ask Brittany what she's seeing.
@@ClaraCFO THANKS!!
I faxed mine in on January 17, 2021 and again 5 weeks later just in case it was lost. Still haven’t received a check or denial letter. The previous 3 checks in 2020 took 4-5 weeks.
@@cassygleim6946 Thank you for your reply and experienced info Cassy. I faxed one on 2/5/2021 and another separate one on 2/12/21 and have not heard from either. Since you faxed yours initially on 1/17/21 and have not heard anything and therefore older than either of my two that is more discouraging for me. In retrospect probably should have waited to claim it on the Q1 Form 941. Kinda defeats the purpose of the 7200
Good Luck in getting your credit response from the IRS
When you talk about the ERTC credit for Scorp owners... When its a single employee owner on the payroll, that person does ALL THE WORK. They ARE an employee. CLEARLY! I disagree that the owner shouldn't be treated an employee just because they are the only employee! We aren't treated differently otherwise! Often times the owner does the MOST work and carries the business.
I hear you Robert...100% - and like we discussed - this is going to be interpreted many different ways. But the purpose is not to compensate owners...the purpose is to help keep employees on payroll by freeing up cash flow. So feel free to interpret this how you wish, but I typically take a more conservative approach.
@@ClaraCFO I do see your point. However, who benefits from the ERTC credit directly? The owners do. Even if the owner doesn't claim their personal wages, they still benefit from claiming the wages of the other employees. The employees benefit indirectly by getting to keep jobs. You would think in the latest guidance that was just released 10 or so days ago they would have addressed this issues if owners wages were not supposed to be claimed. The outcome of all this will be interesting and very frustrating to say the least.
@@roberts8849 Couldn't agree more. So is it clarified now that as a owner, owner employee wages can be claimed for ERTC?
@@sanramonhome3285 NO its most certainly NOT clarified and 100% that S Corp owners can take the credit. The IRS did a horrible job as usual with the guidance and we are all waiting to see. I am in the camp that believes the owners have NOT been excluded from taking the credit but others are concerned about it.
@@roberts8849 Family attribution rules of 267(c) ruin ERC for >50% owners/spouses. You can't claim the wages of these owners once you walk through the law.
The key problem is that there is (almost) always more than one >50% owner. This results because ownership attributes from the owner to their spouse, siblings, ancestors, and descendants under 267(c). We end up with the own themselves and these relatives all being treated as >50% owners. Therefore we have a relationship that is prohibited for the direct owner - ie the direct owner is the son of the indirect owner and therefore disqualified for ERC. These articles explain the problem in more detail:
evergreensmallbusiness.com/when-owner-wages-become-ineligible-for-the-employer-retention-credit/
www.currentfederaltaxdevelopments.com/blog/2021/4/3/tax-advisers-area-51-employee-retention-credit-and-majority-shareholders
www.tomtalkstaxes.com/p/tom-talks-taxes-april-30-2021
:)
:)
Employee Retention Credit Scam Alert.
In IR 2022-183, the IRS is warning employers to watch out for third parties advising them to claim the Employee Retention Credit (ERC), when they may not actually qualify for the credit by disregarding the taxpayer’s eligibility or proper calculation of the credit. These bad actors will ask for a large up-front fee based on the amount of a refund without explaining that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.
Employers should file an amended return to correct overstated wage deductions if qualified wages were deducted before the an employment tax return was filed claiming the credit.
Businesses should be on guard and not fall prey to advertised schemes and direct solicitations. Employers remain liable for the reporting and payment of employment tax regardless if a third-party should administer the taxes on their behalf. Erroneous claiming of the ERC will lead to not only repaying the credit but will include penalties and interest.
Are you single? 😂
Employee Retention Credit Scam Alert.
In IR 2022-183, the IRS is warning employers to watch out for third parties advising them to claim the Employee Retention Credit (ERC), when they may not actually qualify for the credit by disregarding the taxpayer’s eligibility or proper calculation of the credit. These bad actors will ask for a large up-front fee based on the amount of a refund without explaining that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.
Employers should file an amended return to correct overstated wage deductions if qualified wages were deducted before the an employment tax return was filed claiming the credit.
Businesses should be on guard and not fall prey to advertised schemes and direct solicitations. Employers remain liable for the reporting and payment of employment tax regardless if a third-party should administer the taxes on their behalf. Erroneous claiming of the ERC will lead to not only repaying the credit but will include penalties and interest.