Employee Retention Tax Credit Explainer – ERTC Claims Process Video Launched
The Employee Retention Tax Credit (ERTC) is a federal program designed to provide financial assistance to businesses struggling to keep their employees during the COVID-19 pandemic. Qualifying businesses can receive a tax credit of up to $5,000 per employee for wages paid from March 13th, 2020 to January 1st, 2021.
To provide businesses with more information about the ERTC and to help them navigate through the claim process, an ERTC Claims Process Video has been launched.
Overview of the Employee Retention Tax Credit (ERTC)
The Employee Retention Tax Credit (ERTC) is a refundable tax credit that provides financial incentives to businesses of all sizes to help them keep their employees on the payroll as the economy continues to recover from the impacts of COVID-19. The ERTC was created as part of the CARES Act, and it is designed to support employers who have been unable to fully or partially suspend operations during 2020 due to pandemic-related circumstances beyond their control. The ERTC is available for qualified wages paid after March 12, 2020 and before January 1, 2021.
The ERTC provides employers with a certain percentage (50% – 70%) of qualified wages that were actually paid after March 12, 2020 but before January 1, 2021. To qualify for this credit employers must meet several criteria which include:
- Having some or all operations suspended due to federal, state or local regulations related to COVID-19 during any calendar quarter in 2020; OR
- Experiencing 20% or more decline in gross receipts in any calendar quarter in 2020 compared with same calendar quarter in 2019.
Other criteria include having fewer than 500 full time employees can also qualify for this credit if they have experienced 20% gross revenue decline during any calendar quarter compared with same time period during year 2019. Employers must also reduce total compensation staff by more than 25% between certain specified dates and not lay off workers between December 31, 2019 and May 5th 2020 compare to layoffs prior during pandemic. Employers can now claim an employee retention tax credit regardless if they applied for forgivable Paycheck Protection Program loan or not.
Overview of the ERTC Claims Process
The Employee Retention Tax Credit (ERTC) is a program introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It provides a tax credit to employers that continue to pay employees whose operations are fully or partly suspended due to the COVID-19 pandemic. Eligible employers may be able to claim up to 50% of their employee wages back in the form of payroll tax credits, up to a $5,000 maximum. To help employers understand the ERTC claims process, the IRS has released an explainer video outlining how businesses can apply for the credits and maximize their savings.
This overview provides an understanding of how your business can leverage the ERTC program and benefit from this limited time opportunity:
- Establish eligibility: Review if your business qualifies for ERTC relief by reviewing IRS guidance on eligibility criteria and necessary documentation;
- Prepare Application: Gather all relevant documents required for submission;
- Register with IRS Online System: Receive an authorization key from the IRS online system prior to application submission;
- Submit Claim: Submit completed ERTC application through designated portal once all documents have been verified by the IRS;
- Confirmation & Certify: Receive IRST confirmation of your submitted claim and take next steps as prescribed by applicable laws;
- Claim Payment/Reinvestment: Once processed successfully, expect payouts or reinvestment at applicable employer chosen level.
ERTC Eligibility Requirements
The Employee Retention Tax Credit (ERTC) is designed to help employers offset the costs of retaining employees who have been impacted by the COVID-19 pandemic. To be eligible for the ERTC, employers must meet certain criteria. In this article, we'll discuss these criteria and explain the ERTC claims process.
Qualifying wages are based upon the total income from wages and self-employment earned during a specific time period prior to filing for ERTC. For taxpayers who elect to receive the ERTC, the qualifying wage is based on 2019 and 2020 total wages, including income from self-employment, net earnings from self-employment, or net farm profits reported on Form 1040 Schedule C, line 31. Deductible expenses are taken into account and must be reported on Schedule C.
Taxpayers claiming qualifying wages must possess the following qualifying wages:
- 2019: Total income of at least $3,000 in taxable non-reimbursable expenses (wagesi + self-employment)
- 2020: Total income of at least $10,400 in taxable non-reimbursable expenses (wages + self-employment)
The calculation is used to determine how much ERTC credit will be available to the taxpayer. For example, a taxpayer with $18,000 in qualifying wage income may receive a maximum credit of 50 percent of those qualified expenses. This means that up to $9000 in tax credits may be available if all requirements are met. The IRS will also consider any unreimbursed job costs when determining eligibility for an Earned Income Tax Credit or refundable tax credits (such as Dependent Care Credit or American Opportunity Credit). These eligible job costs include costs for items such as uniforms or tools required for your employment that you have not been reimbursed for. It is important to note that these unreimbursed job costs are limited to no more than two percent of Adjusted Gross Income and only up to maximums set by normal business expense deduction guidelines such as ordinary and necessary business expenses associated with a trade or business.
In order to qualify for ERTC benefits taxpayers must meet basic eligibility requirements established by Internal Revenue Service Code Section 32 including having either individuals between age 25 – 65 filing jointly with or without dependent children or those who are not full time students between age 19 – 24 filing jointly without dependents for at least half of their tax year before December 31st 2020.
If you are a current or former employee of a company that participates in the Employee Retraining Tuition Credit (ERTC) program, you may be eligible for tuition assistance. Qualifying employers can vary from state to state and region to region, but they generally include small- and medium-sized businesses in the private sector. Companies must apply to participate in the ERTC program, and they must meet certain criteria in order to be approved.
Eligible employers are typically:
- Businesses with fewer than 250 employees
- Companies with an office located within the states of California, Idaho, Nevada or Washington
- Businesses registered with the U.S. Securities and Exchange Commission
- Businesses that provide basic goods and services directly to consumers
- Private colleges and universities (in some states)
Eligible employers must also agree to provide employees with up to $2,000 per year for employee retraining on a tax-free basis. Additionally, qualifying companies must commit to paying all employee tuition costs up front; no reimbursement is required. Approved employers will receive invoices for each student’s tuition costs as well as an official letter from the state government confirming their participation in the program.
In order to qualify for the Emergency Retirement and Temporary Cost-of-Living Operative (ERTC) program, employees must meet a variety of criteria. Generally, eligible employees are those who are employed in any branch of the United States federal government in a permanent position and have a minimum of 12 years of service. Employees who have completed service as members of Congress, judges or justices, or Reserve Officers Training Corps member also may be eligible to participate.
In addition to the general eligibility requirements, there are specific factors that must be met for certain types of employees. Specifically for retired members or former employees who choose to continue their retirement benefit deductions under the Federal Employees Retirement System (FERS), three-year extended obligations apply to individuals that retire after December 31, 2021. For example, an employee retiring on January 1st 2022 would need three full years from the date of retirement in order to be eligible for ERTC benefits if continuing FERS deductions.
Finally, there are some circumstances where non-appropriated fund (NAF) employees may qualify depending on their disability status and rate of pay while employed by NAF activities immediately preceding their federal employment. Individuals covered by this category should contact their payroll office at their agency before submitting an ERTC form in order to determine whether they are indeed eligible under these rules.
ERTC Claims Process
The Employee Retention Tax Credit (ERTC) is a key federal provision of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that can help employers receive tax credits for wages paid to their employees during the pandemic. A process to claim the credit has recently been launched, and our newly released video can help employers understand how to claim the credit and benefit from it.
Filing Form 941
Once you have your ERTC financials in order, it’s time to file Form 941, the Employer’s Quarterly Federal Tax Return. This form must be filed each quarter with the IRS and must include:
- the amount of wages paid
- the amount of Social Security and Medicare taxes withheld from employee wages
- any tips reported by employees
- employer contributions for Supplemental Unemployment Benefit plans
- the amount of advance ERC payments made during the quarter
- an accounting for any adjustments or prior-quarter overpayments.
It is important to note that if you are filing Form 941 separately from other employers in your controlled group or business unit, you must also submit a form 944.1 with your report. Additionally, certain rates may change depending on legislation passed during a particular quarter or new guidance issued by the IRS; be sure to review your payroll transactions carefully and report them accurately on Form 941. If there is any ambiguity regarding any amounts due on this form or if there are any special instructions regarding withholding rates or payment arrangements, consult a knowledgeable tax attorney who is familiar with ERTC filing requirements before submitting your paperwork.
Claiming the Credit
The Employee Retention Tax Credit (ERTC) is a credit incentive offered to employers to keep employees on their payroll and retain them during the pandemic-related economic downturn. In order to claim the credit, employers must first demonstrate their eligibility by properly completing and submitting IRS Form 941 each quarter during their participation in the program. After eligibility has been established, employers can then move on to filling out Part III of Form 941 which allows for reporting of the ERTC for the applicable quarter.
In order to accurately report and maximize your ERTC benefit, you must complete two worksheets which are required in order to determine how much credit you may be eligible for. The first worksheet is used to calculate wages ineligible for other tax credits while the second worksheet helps you compute your total qualified wages. Once you have these calculations completed, you can then fill out Part III of Form 941 with this information. It is important that all data entered into Part III of Form 941 accurately reflects the calculation results from both worksheets as inaccurate entry may result in a disallowance of any claims made within that reporting period.
Additionally, a partnered resource video has been released detailing claims process step-by-step with further explanation on required worksheets when claiming the credit. This will help ensure accuracy when reporting for your applicable quarter.
Calculating the Credit
When calculating the credit, it is important to consider the medical expenses incurred in relation to the ERTC claim. This includes health care items that are not covered by your insurance policy and out-of-pocket medical costs. It is important to note that only certain types of medical expenses qualify for an ERTC credit, so it is important to carefully review your plan's policy before submitting a claim.
If you are submitting an ERTC credit claim, be sure to include receipts and records showing all out-of-pocket costs incurred. Be sure to indicate which expenses apply towards the ERTC credit and which do not; all added up, these figures should represent the full cost of treatment that qualifies for the tax credit.
The explanation of benefits from your health plan will help in determining exactly how much qualifies for an ERTC tax break since it outlines how much was paid by your insurance provider prior to any co-pays or out-of-pocket fees you may have been charged. If you haven't yet received one, reach out to your insurer directly as soon as possible in order to ensure your claim is processed quickly and correctly.
Once you've got a good understanding of all associated costs, you’re ready move forward with submitting a claim for an ERTC tax credit.
ERTC Claims Process Video
The Employee Retention Tax Credit (ERTC) Claim process can be a difficult one to navigate for employers and employees alike. To make the process easier to understand a new video has been launched to walk employers and employees through the ERTC Claim process.
The video will outline the eligibility of employers for ERTC claims and how to maximize the value of ERTC claims. It will also provide step-by-step guidance for employers and employees to help them understand the process:
- Outline the eligibility of employers for ERTC claims.
- Provide guidance on how to maximize the value of ERTC claims.
- Provide step-by-step guidance for employers and employees to understand the process.
Overview of the Video
The ERTC Claims Process Video is designed to give viewers an understanding of the process they will need to follow while filing an ERTC claim. It can be used as a supplement to other forms of communication or as a stand-alone resource for those interested in learning more about the ERTC claims process.
The video provides an overview of key steps and considerations for submitting a successful claim, including:
- documentation requirements and deadlines
- how to check the status of your claim
- important tips for avoiding common mistakes when filing
Additionally, viewers will gain insight into how different types of eligibility factors could impact their claim results.
By watching this video, viewers will be able to better prepare themselves for filing an ERTC claim and get the most out of their benefits.
The ERTC Claims Process Video provides an easy-to-follow guide to help employers understand the requirements and process for claiming the Employee Retention Tax Credit (ERTC). Through the video, viewers will learn step-by-step how to access the ERTC, take advantage of the credit, maximize their credit potential and successfully submit a claim through their tax professional or payroll system.
Part 1: Understanding Eligibility & Calculating Your Credit
In this section of the video, viewers will be able to better determine if they are eligible for an ERTC as well as get a better understanding of how employers can calculate eligible wages & credits.
Part 2: Documentation Requirements & Qualifying Payments.
In this portion of the video, viewers will become aware of what documentation is required to meet eligibility criteria for an ERTC and which payments may be taken into consideration in order to receive any associated credits from this program.
Part 3: Submit Your Claim & Maximize Your Credit Potential.
In this last step of filing your claim for an ERTC, you’ll learn more about how you can partner with a tax professional or payroll system to help maximize your credit potential when submitting your claims.
Benefits of the Video
The ERTC Claims Process video is an informative video that allows viewers to understand the ERTC claims process quickly and easily. A benefit of the video is that it saves businesses time and money in trying to makes sense of a complicated process. It provides clear, concise instruction on how to fill out claims forms, make inquiries, advance claims and handle objections with evidence.
This information can be very useful in reducing costs associated with administrative tasks by ensuring they get done correctly the first time around. Additionally, if an employee has to take a leave then the video can be used as a handy reference guide for when they come back. As well as saving time and money, it increases staff efficiency in understanding their responsibilities under the ERTC regulations.
In summary, having access to this informative resource provides businesses with tangible savings benefits and a robust knowledge base for employee safety training.
By launching the ERTC Claims Process Video, we have provided employees and employers with a clear and concise way to understand ERTC credits and how to claim them. The video serves as an essential guide for employers and employees to understand the full process of claiming tax credits. It also provides tips on how to maximize the benefit from the ERTC. It is our hope that this video will help employers and employees make the most of ERTC credits.
Summary of the ERTC Claims Process
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) recently launched an Employee Retention Tax Credit (ERTC) Claims Process Video to help employers understand how to claim the credits as part of their quarterly payroll tax filing or Form 941. The video provides a comprehensive overview of the ERTC eligible wages and hours, who is eligible for it, how it works, when employers can file for a credit and what forms need to be filled out in order to claim it.
The main points from the video are:
- Employers who have experienced business closures or a significant decline in gross receipts due to COVID-19 can use the ERTC if they have fewer than 500 employees.
- ERTC is an employer-only credit that can be taken against followed quarter 2020 federal employment taxes up to $5,000 per employee.
- The ERTC is based on wages paid – up to $10,000 for each employee – during either one quarter prior or after business closure or 20% decline in gross receipts during 2020 vs 2019 as long as wages were paid between Mar 13th 2020 and Jan 1st 2021.
- Qualifying employers must reduce their FICA taxes on quarterly returns while claiming their credit rate equal to 70 percent of qualified wages paid after March 12th 2020.
- Employers should complete Form 941 & Claim form 7200 before filling out Schedule R form 941c with other information regarding the expense details along with any excess advance payments.
In addition to providing helpful information on qualifying employers and forms in this detailed overview of its claims process, the IRS also provides resources online such as an FAQ page, Tax tip videos and webinars -all at no cost! Employers should consider taking advantage of these helpful tools when filing their tax claims for ERTCs.
Benefits of the ERTC Claims Process Video
The ERTC Claims Process Video provides an effective way for employers to stay informed about the new Employee Retention Tax Credit (ERTC) for 2020 and beyond. This step by step interactive video can help employers understand the requirements to qualify and apply for ERTC credits.
The main benefits of this ERTC Claims Process Video include:
- A narrated step by step process that makes filing comprehensionally simple and easy to follow. The video breaks down the eligibility criteria, what information is needed, how to claim credit amounts and how long returns will take to be processed.
- It covers topics such as definition of a qualified employee, wages used in calculations, payment details, etc., with ease. Employers don’t have to read through complex documents or try to understand complicated regulations anymore.
- The video covers common challenges faced by employers with explanations on how they can overcome them so they don’t miss out on potential benefits from employee retention tax relief.
Thus, this informative video provides a perfect guidepost towards successful completion of the claims process. With its simplicity of use, companies do not have to waste time understanding complicated concepts written in dry tax declarations – they only need to watch and learn!