KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Can you get “free money” through tax credit? Mitch Reitman has the answer
May 17, 2021
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Can you get “free money” through tax credit? Mitch Reitman has the answer
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Mitch Reitman, preeminent tax authority for the alarm industry, is looking to get you free money from IRS. A good thing if you can do it. Something called the Employee Retention Tax Credit (ERTC). Mitch has a long article on the topic; it’s below. Take a quick look and see if you qualify. If you do, pick up the phone and call Mitch – it’s worth sharing your free money with him.
We may have to have a webinar on this. You can stop reading if you didn’t have a 20% reduction in revenue in any quarter in 2020 compared to the same quarter in 2019. There’s a bunch of mumbo jumbo below – easier to call Mitch. His contact info is below. Good luck with the credit.
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CAN YOU CLAIM THE ERTC FOR 2020 IF YOU DIDN’T ALREADY DO SO?
Yes, one unpleasant aspect of the COVID Relief provisions is that they are focused on payroll taxes. Payroll taxes have traditionally been somewhat simple, and the payroll industry has a lot of small firms with limited knowledge. The instructions for IRS Form 941 (the quarterly payroll report) went from two pages to over 100 in 2020, and, as a result, many small providers were overwhelmed. This is not only a good time to reevaluate your payroll processing, but to pick up some easy money by claiming the ERTC for 2020.
If your business meets the 20%-reduction-in-sales rule for any quarter in 2020 compared to the same quarter in 2019, the you can claim the ERTC for 2020 and the first two quarters in 2021. Keep in mind that the ERTC is worth different amounts for 2020 and the first two quarters of 2021. For wages paid after March 12, 2020, and before January 1, 2021, the ERTC can be applied to 50% of qualifying wages up to $10,000. This means a maximum of $5,000 per employee could be credited back to your company if it qualifies.
HOW DO I GET THE ERTC?
Claiming the ERTC is relatively simple, OK simple for a tax professional. It is a refundable tax credit that is claimed when you report your total qualified wages for purposes of the ERTC for each calendar quarter on their federal employment tax returns (Form 941: Employer's Quarterly Federal Tax Return). Refundable means that if the credit exceeds your tax liability, the IRS will actually issue you a check (or you can apply it to your next quarter’s tax liability).
If you are confident that you will receive it, you can also reduce your payroll deposits in anticipation of receiving the credit. If you want to receive a payment in advance from the IRS, you can even submit a Form 7200 and receive the tax credit back early in the form of a check from the IRS.
If you decide to claim the ERTC for 2020, you should first determine which payroll was paid for with PPP funds and then calculate which qualifying wages would be eligible. Next you should amend the appropriate quarterly Form 941s for 2020 and claim the credit. Of course, the IRS has not given specific guidance on this procedure.
We live in interesting times, and now, more than ever, smart business owners are spending time with their tax advisors so as to not leave easy money on the table.
Mitch Reitman
Reitman Consulting Group, Inc
Tax and Financial services
817-698-9999
MReitman@Reitman.US
http://WWW.Reitman.US
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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