Employee Retention Credit Offers Benefits For Construction Contractors

by Admin

Posted on 21-11-2022 06:15 PM

Employers in construction are typically eligible, because government orders restricted their operations. Misinformed business owners lacking a full understanding employee retention credit worksheet of the credit and its qualifications. Small contractors may request advance payment of the credit through Form 7200, Advance of Employer Credits Due to Covid-19, after reducing deposits.

Misconception #2 - My construction business is ineligible for ERC because it did not experience a 50% or greater decline in gross receipts. Contractors can access the Employee Retention Credit for the first and second calendar quarters of 2021 prior to filing their employment tax returns by reducing employment tax deposits. Fewer than 500 employees - If your company has 500 or fewer employees, any compensation paid during the period when the operations were affected by one of the two scenarios above is eligible for the credit, whether the employees were working or not. Some analysis must be done to properly determine the number of employees a company employs for purposes of the 500 employee threshold.

Should Construction Companies File For The Employee Retention Credit?

The ERC could be worth a maximum of $7,000 per employee per calendar quarter in 2021. Regarding timing, Qualified Wages are compensation provided to an employee after March 12, 2020 and before July 1, 2021 , and may also include the Eligible Employer's qualified health plan expenses that are allocable to the wages. A company may not double benefit from claimed credits based on the same wages for purposes of the ERC, the PPP forgiveness determination and other wage-based tax credits.

The time is ripe for contractors to determine their credit eligibility by consulting an expert. A lot of confusion still exists surrounding who is eligible to claim the employee retention credit and who isn't. Luckily, the IRS released new guidance earlier this week regarding ERC to clarify retroactive changes made to the credit employee retention tax credit for the 2020 tax year and explain how employers who received a Paycheck Protection Program loan may claim it. With rising inflation and an uncertain market ahead, seeing so many eligible companies miss out on such a valuable resource is disheartening.

Discover Aprio's Erc Solutions

Even as subsequent legislation expanded the eligibility requirements for employers so that they could now receive both the credit and PPP. Another way for employers in the construction industry to be eligible is by showing that the business suffered a reduction in gross receipts. In addition to the ERC, the federal government has introduced other credits designed to help businesses weather the long-term effects of the pandemic and to encourage both innovation and the employment of American workers. Companies should talk with their tax preparers about these additional credits available to them including the Research & Development (R&D) tax credit, available to companies developing new or improved business components.

  • The 2021 ERC is computed as 70 percent of an employee's wages up to $10,000 for the quarter, or up to a $7,000 credit per employee, per quarter.
  • A proactive approach is needed to maximize PPP loan forgiveness and fully leverage the benefits of ERC.
  • If a construction business meets the eligibility requirements for the ERC, the credit can be claimed on previously filed payroll tax forms.

If your company had W-2 employees in 2020 and 2021, you can qualify if you experienced impacts to your operations because your third-party vendors experienced supply shortages due to government-ordered shutdowns. An Eligible Employer claims the ERC is by reducing a quarter's required payroll tax deposits on its Form 941. Initially, the ERC is applied against the 6.2% employer's share of social security taxes due on all wages paid to all employees for the quarter. If an ERC is more than that amount, the ERC may offset against the rest of the payroll tax liabilities on Form 941 for the quarter. This figure is more generous than the tax credit available during 2020, which was 50% of qualified wages paid per employee for all quarters (in other words, up to $5,000 per employee).

"We're still finding every day that construction is a very underutilized market when it comes to incentive tax credits in general," he says. To benefit from the credit, you or your accountant or financial adviser will have to file an amended 941 payroll tax form. Currently, IRS processing is taking about eight months, although in recent months that has shortened to as few as four to six months.

employee retention credit construction industry

general are not a new thing. He encourages construction contractors and other small-business owners to take advantage of this opportunity before funds run out or the three-year claims window closes. The Employee Retention Credit remains one of the best tax benefits out there for small and medium business - as well as tax-exempt entities - to keep doors open and employees on payroll during this difficult economy.

https://storage.googleapis.com/3t5/employeeretentioncredittax/Employee-Retention-Tax-Credit/The-Construction-Company-Erc-Specialist-Employee-Retention-Credit.html
Search
Categories
Recent Posts