These COVID Tax Credits Are Still Available
If your business was financially impacted by restrictions and lockdowns due to COVID-19, you may still qualify for tax credits established through the CARES Act. Although some COVID financial relief is no longer available, such as the PPP loan, there are still some ways to receive tax benefits.
All IRS-approved tax credit programs providing relief to businesses have deadlines for when to apply. Because of the volume of applicants to these programs, it is best to apply as soon as possible.
Employee Retention Tax Credit
The Employee Retention Tax Credit (ERC) was established under the CARES Act to provide financial relief to small businesses who paid qualified wages to employees during the pandemic. Business owners have until April 15, 2024 to qualify for the ERC credit. However, with IRS delays, it’s best to apply sooner than later.
This tax credit rewards businesses who kept staff on payroll while their business was either forced to shut down or was heavily restricted because of COVID regulations in 2020.
At the height of the pandemic restrictions, between March 12, 2020 and December 31, 2021, some businesses, such as restaurants, could not open to full capacity, or even open at all. This caused a significant decline in gross receipts for many businesses. The CARES Act established the ERC credit to help these businesses recover the costs of keeping their businesses open.
Families First Coronavirus Response Act (FFCRA)
The FFCRA established two refundable payroll tax credits available for eligible employers who paid qualified sick leave and family leave wages between April 1, 2020 and December 31, 2020. Through the tax credits, small and mid-sized businesses could be reimbursed dollar-for-dollar on paid sick leave and family leave wages paid during the specified timeframe. To qualify, businesses must have fewer than 500 employees.
Payments for the FFCRA come in the form of a refundable tax credit. If the amount is more than the amount owed in taxes for that tax year, the business will receive it as a refund.
This tax credit could provide serious relief to businesses who had to pay leave for families who were sick with COVID-19. Businesses who had to pay for family leave due to children who couldn’t attend school or daycare due to COVID-19 precautions also qualify. For sick leave, the tax credit is good for up to 80 hours per employee. For family leave, the tax credit is good for up to ten weeks per employee.
How Do I Apply for These Tax Credits?
If your business qualifies for a COVID-19-related tax credit, you need to apply before that tax credit’s deadline. For example, the ERC deadline for the 2020 tax year is April 15, 2024. However, the IRS has already received a surplus amount of applications, causing internal delays with approving the tax credit. You should apply as soon as possible for these tax credits in order to get approved faster, providing quicker financial relief to your business.
To apply for the ERC tax credit, it’s best to get the help of an experienced ERC consultant. ERC specialists have experience in tax consulting or are certified tax attorneys who understand how to handle applications to the IRS. This can give you a better and quicker chance at approval without any issues. To apply for the FFCRA tax credit, it’s also best to get the help of a tax specialist.