You can apply for the ERC if your gross income has fallen by more than 20%. Suppose that the drop is greater than 90%. Even if you have more than 500 employees, you may qualify as an employee with serious problems and be eligible for credit. Windes, a California-based tax planning firm, offers ERC qualification assistance to help you determine if your company qualifies for the ERC.
The most up-to-date employee retention credit requirements remain similar to the original stipulations established by the IRS. For an employer that qualifies for the ERC under the requirement of a government order, business operations must have been fully or partially suspended during the corresponding calendar quarter due to a government order that limits business, travel or group meetings due to COVID-19. The ERTC is a refundable credit that companies can request on qualifying salaries, including certain health insurance costs, paid to employees. People who have more than 100 full-time employees can only use the qualified salaries of employees who do not provide services due to the suspension or decline of business activity. The best way to determine if you meet the requirements is to work with a professional tax planning and advisory firm to address the complex changes introduced in the ERC requirements.
Changes in programs and incentives for companies have made it difficult for many people to understand ERC qualifications. We will evaluate your company's payroll data and gross revenues to see if it meets the most recent requirements established by the CAA and the BIB. This law allowed some employers most affected by financial difficulties to be able to claim the credit against the qualified salaries of all their employees, rather than just those who did not provide services. To do this, it is necessary to understand how this program works, who qualifies for the ERC and how to claim it.
The amount of eligible salaries depends largely on how the qualifying salaries were reflected in the PPP loan forgiveness application. Previously, the Consolidated Appropriations Act expanded the requirements to include companies that applied for a loan under the Paycheck Protection Program (PPP), including borrowers from the initial round of the PPP who were not originally eligible to apply for the tax credit. Although a large number of employers who were otherwise eligible for the ERC did not apply for the credit, they still have time to file amended payroll tax returns and take advantage of the ERC. It also included the addition of special qualifications for employers with severe financial difficulties or who are part of a recovering startup.
To apply for credit for previous quarters, employers must file Form 941-X, Employer's Adjusted Quarterly Federal Tax Return or Request for Refund, for the applicable quarters in which qualifying wages were paid.