How to Qualify for the Employee Retention Tax Credit
Because the COVID-19 pandemic in 2020 and 2021 disrupted industries and the economy in the United States, construction companies have been hit hard by project delays, supply chain disruptions, infection control mandates, and labor shortages. To help alleviate some of the financial burden, the US government introduced the Employee Retention Tax Credit (ERTC), a refundable tax credit aimed at helping businesses retain employees during those years.
The ERTC can be a valuable lifeline for construction companies struggling to keep their operations afloat. However, navigating the complex tax regulations and documentation requirements can be overwhelming. This is where tax strategy experts can help construction companies maximize their eligibility for the ERTC and minimize the risk of audits.
To qualify for the ERTC, construction companies must meet specific eligibility requirements, which go beyond experiencing a significant decline in gross receipts or a full or partial suspension of business operations due to a government order related to COVID-19. Qualified tax strategy experts can help construction companies determine their eligibility and advise them on how to best document and report their claims.
Before 2021, many business owners were advised by lending institutions and the accountants to apply for and receive PPP loans and have them forgiven. This was easier and faster than the ERTC in most cases. Now it’s possible to receive the ERTC after having PPP loans forgiven under revised IRS rules.
Benefits of Tax Credit Experts for Construction Companies
Using experienced and versatile tax strategy expert to qualify for and claim all the allowable ERTC and any other possible tax credits can result in substantial amounts of money for construction business when it’s most needed this year. The calculation of the ERTC can also be complicated, as it involves a percentage of qualified wages paid to employees, including certain health plan expenses. When a business received one or two PPP loans and had them forgiven, this amount has to be included in the calculation of the ERTC. The licensed CPAs we have are tax credit experts who can help construction companies determine the exact amount of the Employee Retention Credit they are eligible for and ensure they are not exceeding the maximum allowable amount per employee per quarter.
Additionally, if you were told that the only qualification to consider is substantial loss of revenue compared to 2019, then you could probably be leaving money on the table. There has been a lot of changes and updates to the IRS guidelines and rules regarding the ERTC. The final rules limit eligible businesses to file only for the six quarters the IRS will consider.
Having worked with both large and small companies in a variety of situations, all possible and allowable business impacts and all the qualifying factors are considered. Many business owners ask how much money can this mean for them. So far the teams working with Michael Glowacki have successfully, legally claimed ERTC refunds up to seven figures in the construction industry.
Employee Retention Credit Can Affect Your Income Tax Return
When businesses receive the ERTC refund checks, they will have higher profits with lower payroll costs and will need to amend their income tax returns for the affected tax years. Often inexperienced ERTC service providers don’t realize to warn a business who qualifies for the ERTC that their income taxes will be affected for the 2020 and 2021 tax years. Another area where tax strategy experts like Michael Glowacki can add value is in advising construction companies on how to qualify for and optimize the Research and Development (R&D) income tax credits after qualifying for the ERTC. This may involve amending previous income tax filings to claim this additional R&D tax credit to offset the lower payroll costs and increase in profits.
Experts on Tax Credits for Your Business
In conclusion, a versatile tax strategy expert can play a vital role in helping construction companies navigate the complexities of the ERTC and take full advantage of this important tax credit. With the help, construction companies can access the financial relief they need to keep their operations running and retain their valuable employees during these uncertain times. If you are a construction company looking to qualify for the ERTC, we encourage you to consult with a qualified tax strategy expert such as Michael Glowacki who can help you develop an effective tax strategy that meets your unique needs and goals.
About the Author: Michael Glowacki is an experienced consultant who has helped numerous businesses in the construction industry claim both ERTC and R&D tax credits. These tax credit studies are done by US-based accounting professionals who provide audit protections and full documentation.
