There has been a flurry of legislative activity since the beginning of the pandemic one year ago. One item that might have flown beneath your radar is the federal Employee Retention Credit (ERC). If your practice was shut down by government order and/or suffered a 50% or more decline in revenue in 2020, then you may be eligible for a $5,000 per employee tax credit.
The credit is calculated as 50% of the first $10,000 in wages paid to each employee during the shutdown/revenue decline period. This credit is captured by amending your payroll tax returns in the affected quarters and either requesting a tax refund or using that credit to offset future payroll tax deposit obligations.
You may also claim the ERC this year until June 30th if you have experienced a revenue decline of 20% or more. You may look back to the previous quarter in order to determine if your wages are credit-eligible for the current quarter.
As with any tax benefit, there is some fine print. For more information on determining if you are ERC eligible and how to capture the benefits, consult with your tax advisor and payroll processor.
by Trey Whitt, Partner, DentMoses, LLP, Birmingham, AL
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