Right now, there are trillions of dollars in government stimulus money going into the economy and one of the places that the government has put this money for businesses is in tax credits. There are four key tax credits that you need to be thinking about and possibly take advantage of today.
#1 Employee Retention Credit (ERC):
In the very first stimulus package, the government said that if you took Paycheck Protection Program (PPP) money then you were not allowed to also take money for the ERC. That has been repealed, and now you can take both. The ERC in 2020 was worth up to $5,000 per quarter per employee for payroll taxes and in 2021, that went up to $7,000 per quarter per employee. There are all sorts of offsets like you can’t use the same money that used for PPP for the employment retention tax credits, there are reduction in revenue requirements and/or government shutdown requirements which can make it challenging. It’s a substantial amount of money so you want to consider and test whether you’re eligible for the ERC.
#2 R&D Tax Credit:
R&D tax credits have been around for a while, but the government has supercharged them with the stimulus packages. Even if you’re not doing what you might consider to be technical R&D, everyone has a different definition of this, the government has a very specific definition and TGG can help you figure out whether or not you qualify. Whether you’re a service business, technology business, or a manufacturing business, if you’re attempting to figure out new ways to make your business better and your customers lives better and you’re using technology to do it, you may qualify for an R&D tax credit. It’s worth looking into because there are hundreds, if not, thousands of dollars that you might find that can directly reduce your income tax burden in 2021, 2022 and beyond.
#3 Families First Coronavirus Response Act (FFCRA) Tax Credit:
As the employer, are eligible for up to $200 per day for 10 total days or $2,000 per employee for any time they had to stay home and take care of a family member. This includes getting the vaccine and being sick afterwards, getting COVID and having to stay home and take care of the kids or anything like that, you can get up to $200 per day as a payroll tax credit against your payroll taxes that you file. Make sure you’re keeping track of anyone who had to stay home to take care of a family member due to any COVID related illness.
#4 COVID Vaccine Tax Credit:
If you gave your employees any time off or if they went during normal working hours to get the COVID vaccine, then you get up to $511 per day per employee, up to a total of 10 days. That’s a total of $5,110 for each employee who was vaccinated. If your employees went twice, that’s $511 multiplied by 2 and you file it again on your payroll tax returns.
If you have any questions about any of these tax credits, please reach out to us. This is thousands of dollars, maybe even millions for you, depending on the size of your company.