Employee Retention Credit 2021? Here’s everything you need to know to take advantage of this powerful tax credit. Hear insights about:
- How the Employee Retention Credit was made available in the first CARES Act, and how in the second version it was made available in conjunction with PPP
- How the Employee Retention Credit 2021 version works, and how the rules have changed since the first version
- How you can qualify for the Employee Retention Credit 2021 if you had at least a 20% drop in revenue compared to the same quarter in 2019
- How the Employee Retention Credit pays 70% of the first $10,000 in wages paid to an employee
- Why you automatically qualify for the credit in a quarter following the quarter in which you experienced the revenue drop
- Why the intent of the Employee Retention Credit is to help subsidize your payroll and offset losses
- How the owner of a business qualifies for the credit, as does their spouse and any employees not related to more than 50% of the owners of the business
- How the qualification depends on if you suffered a 50% reduction in receipts in 2020, or a 20% reduction in 2021 and are in a trade or business
- Why you should make sure that you aren’t using the same salaries to qualify for both the Employee Retention Credit and either round 1 or 2 of the PPP
- What important differences exist between the Paycheck Protection Program and the Employee Retention Credit
Employee Retention Credit 2021: Everything You Need To Know
In this week’s solocast episode of the Progressive Agency podcast, I discuss the ins and outs of the Employee Retention Credit, one of the two programs created for businesses as part of the CARES Act to aid them in paying their employees during the global pandemic. The intent was to subsidize employee pay for businesses that experienced a large financial loss due to the pandemic.
The Employee Retention Credit has gone through a few changes since its inception; it was updated to work alongside the Paycheck Protection Program (PPP). However, it is important to make sure that you aren’t using the same employee salaries to qualify for both programs. The credit equals 70% of the first $10,000 of a qualified employee’s salary.
So who qualifies for this credit? Business owners do, as do their spouses. However, their children do not, as anyone related to more than 50% of the owners of a business are ineligible. To activate this credit, you must have experienced a 50% reduction in revenue compared to the same quarter in 2019, or a 20% reduction in 2021. You must also be in a trade or business, so most agencies would qualify.
To learn more about Employee Retention Credit 2021 implications for your taxes, please reach out to me. And of course, please visit https://craigcodyandcompany.com/agency-podcast/ for more informative, money-saving podcast episodes like this one.
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About Craig Cody:
Craig Cody is a Certified Public Accountant, Certified Tax Coach™, business owner, and the host of The Progressive Dentist Podcast and The Progressive Agency Owner Podcast. Prior to his current work, Craig spent seventeen years with the NYPD, where he retired as a Lieutenant in September 2000. Craig is an expert in helping his clients legally reduce their tax liabilities and keep more of their money. Through his podcast, Craig helps dentists grow their practices through smart financial decisions and through financial education of the kind that isn’t offered in dental school.