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Offset the impact of the pandemic with tax credits

Lower your corporate taxes and improve your ability to innovate.

Claim up to $33,000 in refundable credits per employee

 

The COVID-19 pandemic has been challenging for everyone, and business owners have not been immune to its ongoing impact. Fortunately, the CARES Act includes an employee retention credit designed to offset some of this undue financial hardship and lower the tax burden on companies that retain their employees. Through this program, businesses can claim up to $33,000 for each employee on the payroll between March 12, 2020, and December 31, 2021. Though this program is popular with business owners, it’s less popular with politicians – there was a proposal to eliminate the ERC at the end of Q3 2021. The proposal failed, but it suggests that this credit will not be around forever. Businesses should take advantage while they can.

At HITO, our tax credit specialists help eligible businesses optimize their corporate tax strategy by maximizing their usage of the ERC. Schedule a free consultation today to discover if you qualify.

How the ERC Credit Works:

The ERC credit was explicitly designed to help small businesses (and their employees) stay afloat despite the unforeseen impacts of the COVID-19 pandemic.

Businesses that faced disruptions from March 12, 2020, through December 31, 2021, and continued to pay their employees can use the ERC to minimize their payroll taxes for 2021 and set up their business for long-term success in a post-COVID world.

Who Qualifies for ERC?

When it comes to eligibility, the ERC is available for businesses that experienced a decline in gross receipts of 50% in 2020 and/or 20% in 2021 when compared to the same period in 2019. The ERC is also available for businesses that saw operations fully or partially suspended due to government orders and/or mandates. These include social distancing measures, capacity limits, and pandemic-specific OSHA requirements.

For a more detailed eligibility checklist, click here.

Do PPP Loans Offset ERC Eligibility?

Though the PPP (Paycheck Protection Program) and ERC were both created to help preserve jobs and protect American businesses, they are entirely different programs. Organizations that received PPP (loans are eligible for the Employee Retention Credit even if the PPP debt has been forgiven.

If you tried to apply last year and got rejected, we’ve got good news – the Consolidated Appropriations Act (CAA) of 2021 removed the limitations on claiming ERC and PPP simultaneously. These exciting changes mean previously rejected applicants may now qualify.

How Much Can I Claim?

Through the ERC, businesses can claim up to $33,000 per employee between March 12, 2020, and December 31, 2021. For 2020, the credit limit is $5000 per employee per quarter. For 2021, this limit is $7000 per quarter. The specific amount depends on the degree that your business was impacted.

That’s where we come in. At HITO, we specialize exclusively in tax credits and incentives and know exactly where to look to help your company. We develop customized tax incentive strategies that combine the ERC with other available credits to maximize your tax savings.

ERC Eligibility Checklist

The Employee Retention Credit is available for companies that met one of the following requirements between March 12, 2020, and December 31, 2021.

  1. A decline of more than 50% (2020) and/or 20% (2021) in gross receipts when compared to the same quarter in 2019. You can also compare the preceding quarter for the same qualification. For example, when claiming for Q1 of 2021, you can use Q4 2020 vs. Q4 2019, and Q1 2021 vs. Q1 2019
  2. Full or partial suspension of business operations due to government orders and mandates. These include social distancing rules, capacity limits, COVID-specific health guidelines, new OSHA requirements, and other federal, state, local, and county orders.
  • More than a nominal (10%) portion of business operations were suspended by government order.
  • More than a nominal (10%) portion of business operations were modified due to government order.
  • Disruptions to the supply chain resulting from government orders
  • Partial suspension of operations due to government order
  • Partial suspension of operations due to inability to serve clients remotely
  • Government-mandated reduction of operating hours

If you meet any of the above criteria, you likely qualify for ERC – book a free consultation and discuss your options with a tax incentive specialist today.