The rise of the covid-19 pandemic did leave a toll on the lives of the earthly residents. Humans suffered, the world got stuck, and life lost its soul. Apart from the mental and physical trauma, the pandemic had lent, financial struggles also did not make the hardships any easier. Businesses were shut, stocks were now not in demand, and factories lost their workers. During this came the prohibition of ERC, which stands for Employee Retention Credit. This was brought into existence to provide financial assistance to the suffering companies. The ERC for California businesses provides those eligible employers with payroll tax credits for the submission of wages and health insurance to their employees.
In what ways should you be eligible for the ERC?
The candidates that qualify for the ERC completely depend upon the period one is applying for. If you want to be eligible for 2020, then you must have run a business that eventually was partially or completely shut down due to Covid-19. You also need to showcase a significant decrease in the revenue generated through sales. And it must be less than 50% of comparable gross receipts compared to 2019. Similarly, if you want to qualify for 2021, you must showcase the fact that your business saw a significant loss in its revenue, around 80% of that in 2019. If you were not in the business in 2019, you could compare your receipts to that of 2020.
One should keep in mind that this act doesn’t cover and prohibits self-employed people from claiming ERC for their very own wages. What you can claim is the credit for the varied wages paid to the employees.
How to claim the tax credit?
The program saw its end in 2021, but still, you can manage to get your hands on some tax credits by claiming for an ERC. The process of identification of wages that qualify for the act can be a task by the employer. This is because the tax laws related to the ERC have changed, and that makes it even more difficult to understand for business owners. If you are facing problems getting your hands on or finding it difficult to file for an ERC, you can opt to hire/consult a tax professional. They will make sure and keep track of the filing of the claim.
ConclusionÂ
The presence of Employee Retention Credit has helped and aided a lot of business owners during the financial crisis the world faced due to the pandemic. The presence of this act was brief and got over in 2021. But you can still manage to claim for losses or payment of Employee wages with the help of a tax professional.
