Due to economic disruptions, such as COVID-19, the United States Government steps in to provide temporary tax incentives to lower tax burden on companies impacted by the disruption. 

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The Employee Retention Credit is one of these incentives. The Consolidated Appropriations Act of 2021 increased this credit's total potential benefit and lowered the qualification threshold for companies to take it. Additionally, eligible start-up businesses, those that started after February 15, 2020, will qualify during the final two quarters of 2021 if gross receipts are below $1 million. In simple terms, the credit rewards taxpayers for retaining employees on payroll during 2020 and 2021. Due to the credit's mechanics, the credit can provide a substantial benefit. For example, in 2021, a company of just ten employees could be eligible for a $70,000 refundable credit for each of the first three quarters ($210,000 total in 2021).

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It is important to note that if your company qualifies for this credit, this it will impact your busines income in 2020 and/ or 2021 depending on which quarters are qualified. With extensive experience in CPA services, we are able to provide an estimate of tax burden due to the Employee Retention Credit as well as work directly with your CPA or accountant to ensure all impacted years are amended appropriately.