FORT MYERS, Fla –Local financial and legal experts want Southwest Florida businesses to know about a big tax credit opportunity that can help them rebound during the pandemic.
You could get up to $33,000 per employee under the Employee Retention Credit (ERC). The refundable tax credit was designed to make it easier for businesses to keep employees on the payroll during the pandemic.
But experts said this credit is falling through the cracks as people are filing taxes, simply because many don't know about it. Time is also ticking to take advantage of this. As far experts know right now, you'll only have this year to do so.
“On a very basic level what has happened is if we own a small business, when we went through COVID we couldn't afford to keep everybody on board. People were losing their jobs. Well this program was designed for the small businesses that took the chance, cared about their employees, and kept everybody on board,” explained Adam Bruno, Founder of Evolution Retirement Services. “Because guess what, if those employees would have been let go, the government would have had to pick up the tab anyway in unemployment. So now they’ve created this tax credit and it’s up to $33,000 per employee. It’s almost like their way of saying ‘hey, thank you for sticking with your employees,’” he added.
Local lawyer Greg Nussbickel added that many businesses are more familiar with the Paycheck Protection Program (PPP). He said PPP and ERC were mutually exclusive in 2020 but the laws have changed, and many local business owners just aren't aware of that.
“So when Congress actually enacted these laws, it was an either or situation. So pretty much all businesses went with the PPP because it was going to work out better. Right away when Congress realized that that was going to be the case, they were working on some updated appropriations act to make this more attractive and more useful and so that just kicked in at the very end of last year. And there's a lot of new guidance, this is kind of a brand new area of benefits and area of the law. The upshoot is that it's not an either or, you can actually qualify for both, although you can't double dip on the same wages,” Nussbickel explained.
To take advantage of both, he said you have to look at which wages were already part of a forgivable PPP loan. The ERC could apply to other wages.
The qualifications are different for 2020 and 2021, which experts said has also contributed to some of the misunderstandings.
For 2020, eligible businesses can get up to $5,000 an employee even if you took the PPP. For 2021, they can get as much as $7,000 per employee per quarter.
Keep in mind, the size of your business plays a role in which wages can be claimed.