Do I have to repay the ERTC Credit?
No. This is not a loan. It’s a refundable tax credit. When you file your ERTC claim you will request a refund check.
Can I just have my CPA file? Why would I use ERTC Specialists?
Of course. The challenge is the ERTC is based on your payroll returns and not through your business income tax returns, which is what most CPA’s handle. Because of this most CPA’s don’t process this credit, unless they process your payroll in house. This is also a big reason why this credit is so underutilized. Since CPA’s don’t typically handle it and they are the tax experts, it has mostly fallen in a middle ground where few are able to effectively process the credit. Interestingly, we receive a large portion of our clients from CPA’s.
In our experience we have found that due to the complexity (the ERTC tax code is over 200 pages) and time investment necessary to understand the ERTC program, very few are able to effectively maximize this sizable credit for your business.
Can I get ERC Funds if I already took the PPP?
Yes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, modified the ERTC credit rules. One of the modifications included allowing a company to have a PPP loan and still take advantage of the ERTC credit. However, you can’t use the same dollar for dollar funds. We take this into account when processing your ERTC credit.
My revenue went up in 2020, can I still qualify for the ERTC program?
Yes! There are two possible qualifications for 2020: revenue reduction, or a “full or partial shutdown of your business due to COVID-19”. Specifically the IRS describes this as “A government authority required partial or full shutdown of your business during 2020 or 2021. This includes your operations being limited by commerce, inability to travel or restrictions of group meetings.”
Will the ERTC funds run out?
This is not a lending program – tax refunds are issued by the US Treasury. Therefore, all eligible employers will receive the funds.
I’m getting more in ERTC Credit than I paid in taxes?
Remember that this program is taken according to payroll taxes paid, not on income taxes. ERTC funds not applied towards owed payroll taxes are treated as an ‘overdeposit’ of taxes that will be requested as a refund check from the IRS.
As an owner do my wages, or the wages of any family member I employ qualify?
Maybe. Wages of owners who have majority ownership, defined as over 50%, do not qualify, nor do the W2 wages of any immediate family members of the owner. In the case an owner has less than 50% ownership, their W2 wages qualify, as do the W2 wages paid to immediate family members.
Is the ERTC Credit taxable?
The ERTC credit is not considered income for federal income tax purposes, but you must reduce any deductible wage expenses by the amount of the credit. Please provide the credit information to your CPA for tax purposes.