The new stimulus bill (HRR 133) contains an incredibly valuable expansion of refundable payroll tax credits called the Employee Retention Tax Credit (ERTC). These credits were previously unavailable to any taxpayer that received a PPP loan, but the new stimulus law allows us to help you claim up to $5,000 per employee for 2020 and up to $14,000 per employee for 2021.
You will likely qualify for the ERTC if your business operated under a full or partial government mandated shutdown in 2020/2021 or if your sales dropped significantly vs the same quarter in 2019 (sales drops must be 50% for 2020 quarters, but only 20% in 2021).
It is incredibly important to emphasize that claiming the ERTC results in immediate cash back into your bank account each time you run payroll. These are refundable payroll tax credits - they are not credits taken against your annual tax return. This makes them very valuable as immediate stimulus if you qualify for them. If you are qualified, you should begin to claim them immediately with each payroll you run.
More details on the original ERTC are available from the IRS. Eligibility for the ERTC program is subject to a number of rules and it’s important to maximize claims for retroactive credits - if you need our team’s assistance with the process, reach out to brittany.m@harmonycpa.com.
Matt Hetrick, CPA
President & Owner