While $26,000 per employee does sound too good to be true, and yes, there are fraudsters out there, the ERTC is a legitimate tax credit.
to “be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true.”fraudsters out there, the ERTC is a legitimate tax credit. And your business may be entitled to at least some of the money promised.To see if you’re eligible for the ERTC, you first have to determine whether your business was affected by the COVID pandemic in either 2020 or 2021.
If you are eligible, then you can take a tax credit of up to $7,000 per employee for an affected quarter in 2021 or for up to $5,000 for an affected quarter in 2020. The $7,000 credit is available for three quarters in 2021. But the maximum credit you can take in 2020 is $5,000 so that’s where the total amount of $26,000 comes from.The credit is taken against your company’s quarterly payroll taxes, and you still have time to claim it.
“In my opinion, the rules are so ambiguously written that it’s frustrating,” McCabe said. “For some of our clients, it’s confusing how to determine revenues lost if there are different product lines or they’re a seasonal business.” But it’s important to be careful how you approach the ERTC. You should consult with an accountant or law firm that has experience with calculating the credit or, better yet, reach out to a payroll company like ADP or Paychex that is offering these services to their clients and have the resources to determine the proper amount owed to you.
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