Donna Genie breaks down the Employee Retention Credit, a COVID-era tax benefit for businesses that kept employees on payroll. To qualify, you needed a revenue drop of over 50% in 2020 or 20% in 2021, or a government-ordered shutdown. Many ads promise free money without checking if you actually qualify, and claims should have been filed years ago.
Questions this video answers
November 23, 2022.
More than 50% decline in gross receipts (2020 vs prior period).
More than 20% decline in gross receipts (2021 vs prior period).
Full or partial suspension of operations due to a government order (e.g., forced closure of indoor dining).
me@donnacampgroundaccounting.com
Chapters
Foreign. Let's talk a little ERC factor fiction. ERC stands for employee retention credit. These started back in the COVID days to give credit to keep employees on the payroll. Now, there's a lot of confusion in the media recently because a lot of companies have come out to consult with business owners and are telling them that they can receive a lot of money from the IRS and they can help them. Now, many of these companies are one shot deals who are just coming out of the woodwork to talk to you about erc. What we've already done some previous information about ERC scams, whether they're for real, whether it could happen. But let's revisit why you get the erc. It's not as simple as most of the advertising these days is saying. It's not just based on your business. You have to have suffered some losses during COVID So a couple of the rules here you, you had to be your gross receipts for 2020 had to be down more than 50% from the prior period. At that same time, or if it was 2021, you had to be down more than 20%. So you do have to meet qualifications to get the employee retention credit. Many of the ads that are out there now and many of the emails you may be receiving telling you that you could get this money from the irs, don't specify anything about this. Your indicator light should come on that something might be wrong. If somebody is telling you that you qualify for free money from the government with no strings attached, you must meet qualifications to get this money. Next up, if you did not have that revenue decline, can you still qualify? Maybe your business had to be closed based on a government order. That's kind of the other area where the ERC can step in. Even if you didn't have a revenue decline. So many restaurants come into play here, or maybe they were forced to close their interior dining rooms, but they still had a lot of sales going on through delivery services. There is a possibility they may still qualify for the erc. However, the main thing I want to make sure that you understand is that when you receive advertisements about erc, first off, many people have asked me and my clients, hey, can I do this? Can I really get this money? We've already applied and you've already got the money for the erc. If you were my client. We did that right as that program was coming out, not two years later after the fact. You needed it in 2020 and 2021. And that's when we helped our clients take advantage of that program. If your accountant did not assist you with that, yes, you may qualify. But make sure that somebody is walking you through the tests of what your revenue was and showing and proving that you had those declines before telling you you qualify for this money. I have also run across several cases where people said my accountant never even mentioned anything about it and I even asked about it now and they still don't know. Well, maybe you still do qualify. However, your first move should be to look around for a new accountant. That's what your accountant should be helping you do. Navigate tax laws, navigate government programs like this that relate to your taxes and helping you qualify. So you may win on two fronts. You may have ERC money and you may win by looking at a new accounting relationship. So I hope this helps you navigate the waters. I will also post a link in our Show Notes here to tell you a document that links directly to what the qualifications are and helps you navigate the ERC fact or fiction characteristics. Please follow us on Facebook and Instagram. Please make sure to check out our blog and our website linked below. Subscribe to our YouTube channel and hit the bell to be notified when we post. You can email me@donnacampgroundaccounting.com.
