Should Construction Companies File For The Employee Retention Credit?

by Admin

Posted on 21-11-2022 06:15 PM

The COVID-19 pandemic has significantly impacted the construction industry, which is sensitive to economic cycles. But thanks to its potential to create jobs, recovery in the construction industry will also fuel the recovery of the American economy as a whole. With this in mind, Congress introduced the Employee Retention Credit for contractors as part of the Coronavirus Aid, Relief, and Economic Security Act in 2020. Investment advisory services are offered through Aprio Wealth Management, LLC, an independent Securities and Exchange Commission Registered Investment Advisor.

  • If these ERT credits are a surprise to you, Woods suggest you rethink your advisory team, because tax credits in
  • As much of the United States emerges from the shadow of COVID-19, many individuals and firms are beginning to see a return to normal operations.
  • The time is ripe for contractors to determine their credit eligibility by consulting an expert.
  • Misinformed business owners lacking a full understanding of the credit and its qualifications.
  • A welding company in Louisiana, who did not have a decline in gross receipts, received a refund of $148,000 thanks to the ERC program.
  • At a high level, the ERC allows companies to take a fully refundable credit against FICA tax as reported on a quarterly Form 941.

Wages used in calculating paid sick and family leave credits under the Families First Coronavirus Response Act may not also be considered Qualified Wages for purposes of the ERC. In addition, employers may not use the same wages for a Work Opportunity employee retention credit taxable income Tax Credit calculation and in determining the amount of an ERC. The solution is in the form of the payroll tax credit that already has granted millions of dollars in cash and credits that are refundable to employers working in the construction and home improvement service industries.

Oncentive Announces Employee Retention Credit Funding Partnership To Accelerate Clients' Payments

The ERC was originally introduced under the CARES Act, but the Consolidated Appropriations Act signed on December 27, 2020 made some amendments to it, that expanded eligibility to more contractors. The ERC is a fully refundable payroll tax credit for eligible employers up to a maximum of $5,000 for each employee in 2020 or $7,000 per employee per quarter from January to September 2021. The ERC allows eligible employers a refundable payroll tax credit, up to $26,000 per W-2 employee, for continuing to keep Americans on payroll during the pandemic. Employers, desperate due to the circumstances caused by the pandemic, started taking out SBA-guaranteed PPP loans in 2020 but did not focus on ERC funding at all.

How do I find out if I qualify for the employee retention credit?

To qualify for the Employee Retention Credit, your business must fall into one of the following categories: 1) A disruption in business operations beginning after February 15, 2020 and continued due to the coronavirus pandemic. This includes companies that are fully or partially suspended by government orders or are unable to operate at their normal capacity due to the pandemic. OR 2) A revenue decline. Your eligibility is largely based on your 2019 records. First, your organization must have 500 or fewer employees in 2019 to qualify. Also, your company's quarterly gross receipts in 2020 and 2021 must be at least 20% lower than the corresponding quarter in 2019. This is to prove your business was financially impacted by the Coronavirus lockdown.

For businesses continuing to struggle due to the pandemic, the money available through the ERC could represent meaningful additional funding. The funds are also available to Texas contractors that experienced significant disruption due to the winter storms in February, or construction businesses in Louisiana impacted by Hurricane Ida.

Employee Retention Credit For Construction And Home Improvement Service Businesses 2022

We understand this is a complex process and there are a lot of factors to be considered. It's crucial that you carefully review the FAQ page issued by the IRS, which you can find here. We also highly encourage you to reach out to your accounting ERC tax credit construction and tax professionals for further guidance. If you have any questions about how to calculate the ERC or updates to tax policy and their effects, reach out to your BKD Trusted Advisor(tm) or submit the Contact Us form below.

employee retention credit construction industry

However, Congress is currently considering making the increased capital gains rate retroactive to September 13, 2021, which may limit the planning opportunities for transactions completed after that date. Sales that don't get completed until 2022 could see an increase in the benefit of using qualified opportunity zone funds to defer the capital gains tax due to the higher proposed rates. We work off 100% success fees which means we are motivated to find the maximum credits your business can qualify for. The ERC is capped at $10,000 per employee per quarter, which means you can claim up to $7,000 per employee per quarter.

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