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ERTC & other Tax Benefits

Tax benefits refer to financial advantages or incentives provided by governments to individuals, businesses, or specific activities, designed to reduce tax liabilities and promote certain economic behaviors. These benefits can take various forms, such as deductions, credits, exemptions, and incentives. For individuals, tax benefits may include deductions for mortgage interest, education expenses, or contributions to retirement accounts like 401(k)s. Businesses can often take advantage of tax benefits related to research and development, energy efficiency, or job creation. Tax benefits are a way to stimulate economic growth, encourage investment, and promote social and environmental goals while providing financial relief to taxpayers and organizations.

ERTC

As a part of the federal pandemic relief package, Congress updated an existing tax credit known as the Employee Retention Credit (ERC) to encourage employers to keep employees on the payroll. With continued expansions to ERC, nearly every employer qualifies for this tax credit. Employers are encouraged to take advantage of this expansion as each qualified employee can bring up to $26,000 to the employer. EKC SBA has been helping our clients navigate tax credits for over 10 years. We provide the practical help you need during this time of crisis. A quick look at our online calculator will show you how much your tax credit is.

Who is eligible? Private employers, including non-profits that:

  • Have operations full or partially suspended as a result of COVID-19 – OR
  • Have experienced a significant decline in gross receipts as a result of the coronavirus.
  • Startups do qualify.
  • Employers who took PPP ARE ELIGIBLE TO TAKE ERC.

How much is the Tax Credit?

  • For 2020 50% of the first $10K in compensation = $5,000 per employee
  • For 2021 70% of the first $10K per quarter in compensation = $21,000 per employee


$26,000 PER EMPLOYEE

How is the credit paid?

  • The credit reduces your employer Social Security tax liability. If your credit is larger than your social security tax liability, you will get a direct refund from the IRS for the difference.
  • The credit is normally claimed on your federal employment tax returns using Form 941, Employer’s Quarterly Federal Tax Return.
  • An amendment can be made to your Form 941 if determined you qualify after you've filed. Eligible employers can file for an advance on the ERC, and you can claim your credit immediately by reducing payroll taxes sent to the IRS.


If you claim the ERC, how will it impact your federal tax return? Per the IRS:

“An employer receiving a tax credit for qualified wages, including allocable qualified health plan expenses, does not include the credit in gross income for federal income tax purposes. Neither the portion of the credit that reduces the employer’s applicable employment taxes, nor the refundable portion of the credit, is included in the employer’s gross income.”

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Cost Segregation

Engineering-based Cost Segregation Studies permit commercial real estate owners to reclassify real property for depreciation purposes as more rapidly depreciating personal property.  This reclassification results in significant cash flow benefits in both present and future years through considerably shorter depreciable tax life and accelerated depreciation methods.

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R&D

The Research and Development Tax Credit enacted in 1981 to encourage American investment in innovation.  Manufacturers and other technical based operations often qualify for lucrative tax credits based on qualified activities.

Property Tax Mitigation

Comprehensive property tax review provides a fair and equitable assessment of asset value with the potential to decrease a company’s expense and create immediate cash flow for commercial property owners/real estate investors.

Hiring Incentives / WOTC

Local, State, and Federal tax incentive programs allow employers to reduce taxable liability of private-for-profit employers for the hiring of qualified individuals.  Tax credits can range from $2,400 to $9,600 per qualified hire.