Feeling skeptical about Employee Retention Tax Credit benefits? Don’t be.
Applying for the ERC can save you a significant amount of money on taxes. With a 70% credit on qualifying wages up to $10,000 per quarter, your business can benefit greatly. Plus, the ERC has been extended into 2021, allowing you to claim the credit for all four quarters.
Continue reading to learn more about the benefits of applying for the ERC and how it can help your business thrive.
Need ERC help? Contact Northstar for professional assistance from one of our experienced CPAs now.
ERC Benefits Worth Considering
70% Tax Credit on Qualifying Wages
You can claim the Employee Retention Tax Credit on your federal employment tax returns with Form 941. This refundable tax credit can lead to significant tax savings for your business.
By taking advantage of this credit, you can receive up to 70% of the first $10,000 of each employee’s qualifying wage per quarter. This means that you can potentially save up to $7,000 per employee each quarter.
The Employee Retention Tax Credit also helps lower your Social Security tax liability. If the credit exceeds your Social Security tax liability, you may even qualify for a refund.
To claim the credit, simply include it on your Form 941. By understanding and utilizing this credit, you can maximize your tax savings and benefit your business.
Lowering Social Security Tax Liability
Lowering your Social Security tax liability can result in potential refunds if the credit exceeds your tax liability. By reducing payroll costs through the Employee Retention Tax Credit (ERC), you can benefit from a refundable tax credit that can save your company a significant amount of money in taxes.
Here’s how:
Reducing payroll costs
The ERC allows companies to take a 70% tax credit of up to $10,000 of an employee’s qualifying wage each quarter in 2021.
Refundable tax credit
If the credit exceeds your Social Security tax liability, you qualify for a refund. This means you could potentially receive a refund if you’ve eligible employees and meet the qualifying conditions.
Savings in taxes
By taking advantage of the ERC and lowering your Social Security tax liability, you can reduce your overall tax burden and keep more money in your company’s pocket.
Incorporating the ERC into your tax strategy can have a positive impact on your bottom line, giving you the opportunity to lower your costs and increase your financial stability.
Extension of ERC Program Into 2021
The expansion of the Employee Retention Tax Credit (ERC) into 2021 provides you, as an eligible employer, with the opportunity to receive significant tax savings and financial support. Under the new guidelines set by the IRS, you can now claim a 70% tax credit of up to $10,000 of an employee’s qualifying wage for each quarter of the year. This means that you’ve the potential to save a substantial amount of money in taxes.
Additionally, the ERC can help lower your Social Security tax liability, and if the credit exceeds your liability, you may even qualify for a refund. It’s important to note that the ERC extension includes the employer’s portion of Medicare taxes for the third and fourth quarters.
To determine your eligibility and properly claim the ERC, it’s advisable to consult a professional advisor who can guide you through the procedure.
ERC Qualifications for Businesses
To qualify for the Employee Retention Tax Credit, businesses must meet specific conditions, such as experiencing a significant decline in gross receipts or a full or partial suspension due to government orders. These qualifying conditions ensure that the credit is directed towards businesses that have faced challenges due to the pandemic.
By meeting these conditions, you can unlock the following benefits:
Financial relief
The ERC allows you to take a 70% tax credit of up to $10,000 of an employee’s qualifying wage each quarter in 2021. This can save your company a significant amount of money in taxes.
Lowered Social Security tax liability
The ERC also lowers your Social Security tax liability. If the credit exceeds this liability, you may even qualify for a refund.
Extension to 2021
The federal government expanded the ERC into 2021, providing relief for all four quarters. Employers can now receive 70% of the first $10,000 of qualified wages for each employee. This extension includes the employer’s portion of Medicare taxes for the third and fourth quarters.
Eligibility for Claiming ERC Benefits for Employees
If your business has 100 or fewer workers, you can claim the Employee Retention Tax Credit on all your employees’ wages. This credit offers significant benefits compared to previous tax credits.
In 2021, the credit allows companies to take a 70% tax credit of up to $10,000 of an employee’s qualifying wage each quarter. This means you can save a substantial amount of money in taxes. Additionally, the ERC lowers your Social Security tax liability. If the credit exceeds your liability, you may even qualify for a refund.
Moreover, the eligibility for claiming the ERC has expanded to include a new category called recovery startup businesses. This means that even if you’re a startup business trying to recover, you can still take advantage of this valuable tax credit.
For a better understanding of the procedure, consult a professional advisor.
Procedure for Claiming the ERC Tax Credit
To claim the Employee Retention Tax Credit (ERC), you’ll need to complete and submit Form 941 along with any necessary amendments. Filing for ERC has its advantages:
Financial Relief
The ERC allows companies to take a 70% tax credit of up to $10,000 of an employee’s qualifying wage each quarter in 2021. This can save your company a significant amount of money in taxes.
Lowered Social Security Tax Liability
By utilizing the ERC, employers can lower their Social Security tax liability. If the credit exceeds the liability, the employer may even qualify for a refund.
Extension to 2021
The federal government expanded the ERC into 2021, allowing employers to receive a credit of 70% of the first $10,000 of qualified wages for each employee. This expansion includes the employer’s portion of Medicare taxes for the third and fourth quarters.
To claim the ERC, complete Form 941 and, if necessary, amend it. Different types of businesses may have alternative ways of claiming the credit, so investigate the options available for your specific business.
Need ERC help? Contact Northstar for professional assistance from one of our experienced CPAs now.
