Thread by @baldridgecpa

In the past year and a half we have seen the US Government roll out drastic stimulus measures like never before.

PPP and EIDL loans came out early and were widely publicized, but there is a lesser known opportunity not to be missed:

The Employee Retention Credit

A THREAD -

Unlike the PPP and EIDL, which are loans, the Employee Retention Credit lives up to its name as a dollar for dollar credit against payroll taxes paid. For an overview on credits see my prior thread on R&D credits below, but don't get lost over there..

https://twitter.com/baldridgecpa/status/1348020018085318661?s=20

Now that you're caught up on the beauty and magic of credits, the Employee Retention Credit is available to many business owners, and not just the ones you might think.

Initially designed for folks who were shut down and drastically harmed, the credit has since been expanded.

Why does this matter?

The opportunity is HUGE! In some cases people are getting larger Employee Retention Credits than the PPP loans they received.

The credits are monetized by amending your 2020 and 2021 YTD payroll tax forms to pick up money, and file to save going forward.

All businesses that have payroll should consider whether this applies to them.

1. Have employees other than owner on the payroll
2a. Have a significant (>50% in 2020, >20% in 2021) reduction in revenue quarter over quarter. You would look at Q3 2021 vs Q3 2020 for example..

OR

2b. Be shut down (totally or partially) for any amount of time.

This even includes businesses like restaurants that were limited in occupancy, but still had to go and outdoor dining options.

In this case your revenue need not fall, but the credit lasts as long as closure.

If one of those applies to you - here is how the credit works:

For 2020 you can receive 50% of the first 10k of qualified wages paid to employees per quarter during the above periods.

For 2021 it is upped 70% of the first 10k each quarter (up to 7,000 or 28,000 yearly!)

Businesses with up to 100 employees qualify in 2020 and up to 500 employees qualify in 2021. Also certain startup businesses (or startup divisions in your business) could also qualify.

There are some limitations - one is you can't double dip credits the forgiven PPP loan funds.

Also you can't receive credits on employees that have ownership or are related to owners.

This is a complex calculation, and you should get qualified help to calculate it.

It is also administratively burdensome, in that you will need to amend your payroll returns, and potentially your company and personal federal returns.

And, no surprise, the IRS is way behind on processing these, so it may take time to receive your refund check in the mail.

You will have 3 years from the due date of the quarterly payroll return to claim your credit, so there is time to research and execute, but don't wait too long.

Many of these credits will not be realized, and that's a shame.

For more information on this subject, follow @danchodan, the expert on the Employee Retention Credit. He helped teach me about this credit, and has prepared hundreds of these calculations for his clients.

In addition to Dan, @MainStreet is also preparing these credits as a part of their service offering:

mainstreet.us/partnerships/b…

I recorded a conversation with @danchodan about this a few weeks ago that went about 50 minutes - it dives a bit deeper into the issue, but the issue seems to go forever - he has a pinned thread as well that goes deep into the subject.

Our conversation
directory.libsyn.com/episode/index/…

If this was useful to you, follow, like, retweet and all that jazz.

Look at the pinned tweet on my profile for a lot more content like this.

Also - let me know if you have any questions around this.

Thanks!