ERTC 2021 Tax Strategy Guide Using TurboTax & Benefits

Key Takeaways

  • The Employee Retention Tax Credit (ERTC) is a powerful financial aid for businesses impacted by COVID-19.

  • Businesses want to streamline the process of claiming their ERTC benefits.

  • Eligibility for ERTC includes meeting specific criteria related to the pandemic’s impact on your business.

  • Understanding and calculating qualified wages are crucial steps in maximizing your ERTC claim.

  • Getting started with your ERTC claim is simple and can lead to substantial tax savings for your business.

What Is the ERTC and Who Can Benefit?

The Employee Retention Tax Credit (ERTC) is a beacon of hope for businesses navigating the choppy waters of the COVID-19 pandemic. Essentially, it’s a tax relief program designed to encourage businesses to keep employees on their payroll. If your business faced a decline in gross receipts or was subject to government-mandated full or partial shutdowns, ERTC might be the life raft you need. So, whether you’re a restaurant owner with a quieter dining room or a retailer with a “closed” sign more often than you’d like, this credit could be for you.

ERTC Express: Your Best Option for ERTC Claiming and Processing

When it comes to tax software, TurboTax excels for its ease of use and comprehensive features. It’s like having a tax expert in your corner, guiding you through the maze of tax credits and deductions. ERTC Express provides a clear path to determine your eligibility, calculate your credit, and file the necessary forms. If the thought of tax forms makes you break out in a cold sweat, don’t worry—ERTC Express is here to help simplify things.

Maximizing Your ERTC Benefits

Understanding Qualified Wages

To make the most of the ERTC, you need to understand what ‘qualified wages’ means. These are the wages you’ve paid to your employees during the eligible periods that the ERTC covers. But it’s not just their salaries; it includes health plan expenses too. The amount of credit you can claim per employee has increased significantly from 2020 to 2021, so it’s worth your time to get this right.

Calculating Your ERTC: The Basics

Calculating your ERTC starts with pinpointing which wages qualify. Here’s the deal: for 2021, you can claim up to 70% of $10,000 in wages per employee per quarter. In other words, you could be looking at a $7,000 credit per employee for each quarter. That’s real money that can make a real difference to your business. But to get there, you need to crunch some numbers, and that’s where TurboTax comes in.

Let ERTC Express help you with the key calculations. Just input your payroll data, and it does the heavy lifting. Because this can get complicated, relying on a trusted tool ensures you don’t leave money on the table.

Eligibility Criteria for ERTC

Now, not every business automatically qualifies for the ERTC. There are specific boxes you need to tick. Firstly, your business needs to have been affected by the pandemic—either through a significant decline in sales or by being partially or fully shut down due to government orders. Besides that, you need to have kept your employees on the payroll during these tough times.

The Impact of COVID-19 on Your Business

Let’s dive a bit deeper into what ‘affected by the pandemic’ means. It’s not just about facing challenges; it’s about quantifiable financial impact. You’ll need to show how your business’s revenue has dipped compared to the same quarter in 2019. If you’re seeing a decline of more than 20%, you’re on the path to qualifying for the ERTC.

Besides that, if you were forced to operate below your usual capacity because of government orders, that’s another tick in the eligibility box. Whether it’s a retail shop that had to limit customer numbers or a factory that couldn’t operate at full staff, these are the types of scenarios that the ERTC is designed to assist.

Government Orders and How They Affect Your Eligibility

Government orders can be anything from lockdown mandates to curfews that directly impact your business operations. It’s not just about whether you were forced to close your doors; it’s also about reduced operating hours or capacity restrictions. Documenting these orders and their impact on your business is a crucial step in substantiating your ERTC claim.

Common ERTC Misconceptions Debunked

In the world of tax credits, misunderstandings can cost you—literally. The ERTC is no exception, with a host of myths that could prevent businesses from claiming what they’re rightfully due. Let’s clear the air and tackle some of these misconceptions head-on, ensuring that you have the right information to move forward confidently.

Myths About Revenue and ERTC Eligibility

One common myth is that a business must be on the brink of closure to qualify for ERTC. This isn’t the case. The requirement is a significant decline in revenue, not complete financial ruin. Another misconception is that if your business thrived in other quarters, you can’t claim ERTC for the quarters you did suffer a loss. In truth, ERTC eligibility is determined quarter by quarter.

Understanding Retroactive Claims

Did you know you can claim ERTC retroactively? That’s right—if you missed out on claiming ERTC for eligible quarters in 2021, you haven’t missed the boat. You can amend past payroll tax returns to claim the credit. This is a game-changer for businesses that were unaware of the credit or unsure about their eligibility at the time.

Advanced ERTC Tax Strategies

Taking advantage of the ERTC requires a bit more than just filling out forms. Strategic thinking can help you maximize the credit you receive. For instance, understanding the interplay between ERTC and other tax credits can optimize your overall tax position. Let’s delve into how you can use advanced strategies to bolster your claim.

Leveraging ERTC with Other Tax Credits

While the ERTC is substantial, it’s not the only tax credit on the block. You can—and should—leverage it alongside other credits like the Work Opportunity Tax Credit or Research and Development Tax Credit. The key is to understand how these credits interact and to structure your claims in a way that maximizes your total tax benefits.

For example, wages used for the ERTC can’t be claimed for other credits. Therefore, you’ll need to allocate wages strategically among the various credits to ensure you’re getting the most bang for your buck.

Strategic Planning for ERTC Utilization

Strategic planning for ERTC utilization involves looking ahead and making informed decisions about your payroll and hiring. It’s about understanding the long-term implications of your tax strategies and how they align with your business goals.

  • Consider the timing of your claims and how they impact your cash flow.

  • Explore the possibility of adjusting your payroll expenses to maximize your credit.

  • Stay informed about legislative changes that may affect the ERTC and plan accordingly.

Remember, strategic planning is about foresight and preparation. With the right approach, the ERTC can be more than just a one-time benefit—it can be part of a broader financial strategy that strengthens your business for years to come.

Moreover, don’t forget to keep meticulous records. Good documentation will support your ERTC claim and make the process smoother if you’re ever audited by the IRS.

ERTC Express Features Make ERTC Filing Simpler

ERTC Express has features specifically designed to simplify the ERTC filing process. These tools are built to guide you through each step, ensuring that you claim the correct amount and maintain compliance with IRS requirements.

With ERTC Express, you can enter your payroll information directly into the system, and it will help identify the qualified wages for the ERTC. This reduces the risk of errors and ensures that your calculations are accurate.

Additionally, ERTC Express stays up-to-date with the latest tax laws and guidelines, so you can be confident that your ERTC claim complies with current regulations.

  • Step-by-step guidance through the ERTC process.

  • Direct integration with payroll data to identify qualified wages.

  • Up-to-date information on tax laws and guidelines.

Expert Support: When To Consider Professional Assistance

While TurboTax is a powerful tool, there are times when you might want the reassurance of expert support. If your ERTC claim is particularly complex, or if you’re juggling multiple tax credits, professional assistance can be invaluable.

ERTC Express offers access to tax professionals who can provide personalized advice tailored to your specific situation. This level of support can be the difference between a good tax strategy and a great one.

ERTC Filing Follow-Up: What Comes After

“After you’ve submitted your ERTC claim, it’s not time to sit back and relax just yet. The IRS may reach out with questions or requests for additional documentation. Being prepared for this possibility is crucial to securing your credit without delay.”

Post-filing, keep all related documents organized and readily accessible. This includes payroll records, proof of government orders that impacted your business, and any correspondence with the IRS. If the IRS does contact you, respond promptly and thoroughly to avoid any hitches in your claim.

Remember, the ERTC is a refundable tax credit, which means you may receive a refund if the credit exceeds your total payroll tax liability. Keep an eye on your mail or bank account for this refund, and consult with a tax professional if you have questions about the refund process.

It’s also wise to review your tax strategy regularly. Tax laws and credits like the ERTC can change, and staying on top of these changes ensures you’re always making the most of available benefits.

Responding to IRS Correspondence

If the IRS gets in touch, don’t panic. They often reach out for clarification or additional information. The key is to respond accurately and in a timely manner. This communication is a normal part of the process and can be handled smoothly with the right preparation.

In the event of an audit, having a tax professional by your side can be a huge asset. They can help navigate the audit process, ensure you’re providing the necessary information, and advocate on your behalf.

Moving Forward: Claim Your ERTC Today

The clock is ticking, and there’s no time like the present to claim your Employee Retention Tax Credit. If you’ve been on the fence or unsure about your eligibility, now’s the time to act. You’ve learned about the benefits, the eligibility criteria, and how to calculate your credit. The next step is clear: it’s time to claim what you’re entitled to.

Remember, the ERTC is designed to help businesses like yours keep the lights on and the doors open. By claiming this credit, you’re not just bolstering your finances; you’re supporting your employees and contributing to the broader economic recovery. It’s a win-win situation that you shouldn’t pass up.

So, take a deep breath and dive in. Gather your payroll records, check your eligibility one more time, and let TurboTax guide you through the claiming process. If you hit a snag, their team of experts is just a click or call away. You’ve got this.

  • Gather your payroll records and other necessary documentation.

  • Check your eligibility for the ERTC based on the criteria discussed.

  • Let ERTC Express guide you through the process of claiming your credit.

  • If you need help, reach out to ERTC Express for expert assistance.

Claiming your ERTC is simpler than you might think. The ERTC Express platform takes the guesswork out of the equation, leaving you with more time to focus on what you do best—running your business. So why wait? Get Started on your ERTC claim today.

Frequently Asked Questions

As you prepare to claim your ERTC, you might have a few lingering questions. Let’s tackle some of the most common queries to give you that extra bit of confidence as you move forward.

“Can my business claim the ERTC if we’ve already received a PPP loan? Yes, thanks to changes in the law, you can now benefit from both programs, provided you meet the eligibility criteria.”

Now, let’s dive into some specific questions you might have.

Can I Benefit from ERTC if I’ve Already Received PPP?

Yes, you can. Initially, businesses had to choose between the Paycheck Protection Program (PPP) and the ERTC. However, with the new legislation, you’re allowed to take advantage of both, with one caveat: you can’t use the same wages for both programs. So, if you’ve used PPP funds for certain payroll expenses, you’ll need to claim the ERTC on different payroll costs.

This is where strategic planning comes into play. By carefully allocating your payroll expenses between the two programs, you can maximize your financial benefits. It’s like a financial puzzle, and when the pieces fit, your business reaps the rewards.

What Are the Exact Steps to Claim ERTC?

Claiming your ERTC is a multi-step process that involves a bit of paperwork, but it’s well worth the effort. Here’s a simplified breakdown:

  • Confirm your eligibility based on the impact of COVID-19 on your business.

  • Identify the qualified wages and health expenses you can include in your claim.

  • Calculate the credit amount you’re entitled to for each eligible quarter.

  • File the necessary forms with the IRS, including any amended returns if you’re claiming retroactively.

ERTC Express streamlines this process by walking you through each step and automating the calculations. With their guidance, you can be confident that your claim is accurate and compliant with IRS regulations.

“For those who prefer a step-by-step approach, ERTC Express offers a really simple interface that makes the ERTC claiming process as smooth as possible.”

How Do I Document Qualified Wages for The ERTC?

  • Maintain detailed payroll records that show the wages paid to each employee during eligible quarters.

  • Keep track of any health plan expenses that can be included as qualified wages.

  • Document any periods of partial or full suspension of operations due to government orders related to COVID-19.

  • Store records of any significant declines in gross receipts to establish eligibility.

Proper documentation is your best defense if the IRS ever questions your claim. By keeping meticulous records, you’re not just preparing for the ERTC claim process—you’re also safeguarding your business against future audits.

And remember, if you’re ever in doubt about what constitutes qualified wages or how to document them, ERTC Express has resources to help clarify these points. Don’t hesitate to use them.

Is There a Deadline for Filing an ERTC Claim?

Yes, there is a deadline. Generally, you have three years from the date you filed your original payroll tax return to claim the ERTC by filing an amended return. However, don’t wait until the last minute. The sooner you file, the sooner you can receive your credit and improve your business’s financial health.

Timing is everything. By acting now, you can ensure that your business gets the financial support it needs while navigating the aftermath of the pandemic.

Can Startups Also Claim the ERTC?

Absolutely. If you’re a startup that began operations after February 15, 2020, and you meet the eligibility criteria, you can claim the ERTC. This includes showing that your business was affected by government orders or experienced a decline in gross receipts.

For startups, the ERTC can be particularly impactful. It’s a welcome injection of funds that can help you keep your team intact and your vision on track during these uncertain times.

So, whether you’re a seasoned business owner or a startup entrepreneur, the ERTC is a tax credit that shouldn’t be overlooked. It’s an opportunity to reclaim some of the funds you’ve invested in your employees and to reinforce the foundation of your business as we all work towards economic recovery.

Now that you’re equipped with the knowledge and tools you need, it’s time to take action. Claiming your ERTC is not just about financial relief—it’s about investing in the future of your business and its employees. Get Started with ERTC Express today and secure the benefits your business deserves.

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