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Tax Credit Programs

Employee Retention Credit

Employee Retention Tax Credit (CARES ACT - COVID 19)

The Employee Retention Tax Credit (ERTC) was introduced as part of the CARES Act passed at the end of March 2020, along with the Payroll Protection Program (PPP) among other stimulus packages. With the original CARES Act, eligible employers had the choice of taking a PPP Loan OR using ERTC, but not both. That all changed at the end of December when Congress modified the rules so that employers who took a PPP Loan may also qualify for ERTC. As the IRS states, "Retroactive to the March 13, 2020, enactment of the CARES Act, the law now allows employers who received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan." Without getting into the details as to what ERTC is, if you fall under anyone ONE of these two categories, you likely qualify for a very substantial amount of refundable tax credits.

In 2020, did your business:

  • Revenue decline 50% or more in ANY quarter of 2020, compared to the same quarter in 2019? Or
  • Experience a Full OR Partial shutdown of operations due to a government order at any time in any quarter of 2020? Or
  • Experience supply chain interruptions that had an impact on your business?

If you can answer Yes to either one of those questions, then you may be entitled to a refundable tax credit up to a $5000 for each employee paid in 2020.

For 2021, the eligibility requirements remain the same with respect to Full or Partial shutdown and supply chain issues, but the revenue loss has been reduced to 20% compared to the same quarter in 2019. The refundable tax credit was increased (up to) $7000 per employee per quarter through September 31, 2021.  As a result, you may quality for a credit for each employee up to $21,000 in 2021. As you can imagine, this can amount to a VERY substantial amount of money that may be owed to you as part of the CARES Act.

The calculation process is very complex and time consuming, which is why we will offer to calculate and claim those refundable tax credits.  You will need to retroactively claim refunds from 2020 and 2021. 

Here’s what we will do:

Exact will calculate the eligible wages and applicable ERTC for each quarter and produce the necessary tax forms to claim any refunds. We will factor your original PPP covered period when calculating the wages and credits so that no "double dipping" occurs. *

*The calculation of the precise credit(s) due is a very time consuming and VERY complex. Exact Payroll has developed a ERTC Maximizer program which will maximize your ERTC while accounting for your PPP loan. Our process includes:

  • Using every possible PPP forgiveness period scenario [resulting in 100% of the amount you will [or did] use for PPP forgiveness]
  • Maximize your credit using every forgiveness period mentioned above while allocating ERTC to every employee payroll by payroll
  • Apply the proper eligible wages to both PPP and ERTC. IRS has very specific but complex rules as to what wages apply and what wages are invalid.
  • Provide detailed backup of wages assigned to either category. Wage detail is used and kept for every employee paid during every period used in calculations.

If you have more questions or would like to get started please call us to find out more or complete the form using this link.  

FICA Tip Credit

As a restaurant owner, you may be entitled to receive a Federal Insurance Contributions Act (FICA) tip credit, allowing you to claw back 7.65% of the gross amount of taxes paid on tips over and above the federal minimum wage.

We will will work with you to determine your eligibility as well as help you file for the tax credit. For more information, visit the FICA Tip Credit Guidelines (Federal Insurance Contributions Act)

Work Opportunity Tax Credit

If you have hired individuals from certain targeted groups who have consistently faced significant barriers to employment, you may be eligible for the The Work Opportunity Tax Credit (WOTC). Targeted groups include:

  • Qualified IV-A Recipient
  • Qualified Veteran
  • Ex-Felon
  • Designated Community Resident (DCR)
  • Vocational Rehabilitation Referral
  • Summer Youth Employee
  • Supplemental Nutrition Assistance Program (SNAP) Recipient
  • Supplemental Security Income (SSI) Recipient
  • Long-Term Family Assistance Recipient
  • Qualified Long-Term Unemployment Recipient

Exact Payroll will assist you with pre-screening and certification as well as claiming the tax credit. For more information, visit the IRS WOTC Website.

Welfare to Work

The Welfare-to-Work (WTW) tax credit has been included with the WOTC tax credit as of 2006. See the above section on WOTC for information on eligibility for this tax credit.  This credit requires a separate form which can be found using this link

Empowerment Zone Tax Credit

If you are a business located in a Federal Empowerment Zone (EZ) with employees also located in an Empowerment Zone, you may be eligible for an EZ tax credit of up to $3000 per employee. This credit applies to full-time, part-time, current and newly-hired employees as long as they work at least 90 days during the year in which the credit is claimed.

We will ensure you receive the employment tax credits you deserve. To see what EZ zones are near your business use this visit Find Zones Near Me.