Updates to the Employee Retention Credit

Given the fact that we are now in July, it is time to complete the second quarter payroll tax returns. We’re getting a lot of renewed questions about the Employee Retention Credit (ERC).
In order for you to make the correct choice on your payroll tax returns, I will now answer some of the questions that we are being asked.
Can I receive a PPP Loan and still get an Employee Retention Credit?
Answer – No you cannot. It’s one or the other. If you have already received the PPP Loan, you cannot also put in for an ERC.
If I already received the Employee Retention Credit in the first quarter of this year, can I get another one in the second quarter?
Answer – Nope. Sorry. Only one per customer.
How does the Employee Retention Credit work?
Answer – The credit is fifty percent of $10,000 in payroll, or $5,000. It is a credit that they give you instead of you paying your payroll taxes.
This is not a loan. It is not something that you need to apply for. This is something that you can claim or take.
Is the Employee Retention Credit refundable.
Answer – Yes. You can receive a credit for the unused portion of the $5,000 if we file Form 7200. I want to be clear about how this works. It can be confusing. If we show $10,000 of salary for you in the second quarter of 2020, you would normally pay $1,530 in social security and medicare taxes.
If we do the Form 941 without any federal withholding and claim the ERC, then you will not need to pay in the $1,530. When we file the Form 7200 you will then receive the unused portion of the $5,000 or $3,470 from the IRS. The refunds that we processed in the first quarter took about two months.
How many people can I claim on the ERC.
Answer – As many as you have on payroll.
Prior to completing your payroll tax returns for the second quarter, I need you to make one of the following three choices. Those choices are..
1 – Should we complete your returns in a normal fashion?
2 – Should we claim an Employee Retention Credit in the second quarter?
3 – Or if you have filed for unemployment, should we do a zero payroll in the second quarter to preserve the unemployment benefits?
So that’s it. Win, place, or show. Please let us know ASAP.
Let me leave you with this one thought…
It seems as though I have been writing primarily about fear for the past several months. In these troubling times, fear surrounds us.
Fear for the future of our businesses.
Fear of a depressed economy and how it will affect us.
Fear of getting sick.
I could go on. There’s at least another ten fears that we are all handling. But my point is this.
Your decisions don’t limit you. Only your fears do.
If you choose to live a life governed by fear, if you choose to manage your business based upon your fears, then where will it get you? How will you even begin to be successful in these trying times? How will you even hope to get through all of this with your business and your life intact?
I’m not telling you to be foolhardy or to take unnecessary risks.
I am, on the other hand, saying that you cannot expect to succeed while you are ruled and constrained by your fears. I am saying that you cannot live your life, or operate your business, if you live in a constant state of fear.
We’re all going to get through this. We will all get through this together.
Accounting Solutions Ltd. stands ready to complete its mission and purpose of protecting you, your family, and your business. If there is anything that you need, whether you are a current client or not, please contact us today. I’m here and I remain,
Sincerely yours,
Chris Amundson
Accounting Solutions Ltd.
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