If your company has lost workers because of the government shutdown, you may be eligible for Employee Retention Tax Credits. These tax credits will allow you to offset the cost of health care, furloughed employees, and other related expenses. However, you will need to meet certain criteria to be able to receive the money.
Eligibility requirements
Employee retention tax credit is a government program that rewards businesses for keeping their employees during a period of economic hardship. The federal government sets a maximum of $28,000 for qualifying businesses to claim for all of 2023. However, you may be able to claim more than one quarter of that credit.
To be eligible, you must have 100 or fewer full-time employees. These include employees who work at least 130 hours in a month. In addition, you must have paid qualifying wages for your employees. For example, if you pay an employee $3,500 a year, you can claim a credit of up to $11,000.
The IRS states that you should use Form 941-X to file your quarterly federal tax return. As a result, you should get an estimate of how long it will take to receive your reimbursement. If you are not sure of your eligibility, it is best to consult an accountant or legal counsel says https://ertctaxcreditgov.com/.
Capped at $50,000 per quarter
The employee retention tax credit is an initiative by the Federal government to encourage businesses to maintain their employees during the economic downturn. This program has helped to reduce unemployment. It provides a refundable tax credit of up to $7,000 per quarter.
To qualify, an employer must show a 20 percent decrease in gross receipts over the previous quarter. Employers with over 100 full-time employees are not eligible for this tax credit.
Small qualifying employers may claim the ERC on all wages paid during the eligible period. Qualifying wages are capped at $10,000 per employee. These may include amounts paid for group health plans. Previously, the maximum ERC limit was limited to $5,000.
While the ERC was initially only available to small businesses, new regulations were passed that allow large employers to claim the credit. In addition, the ERC is now available to recovery startup businesses. Recovery startup businesses are businesses that began operations after February 15, 2020.
Can be used for health care expenses for furloughed employees
There are a number of reasons that employers may decide to furlough employees. Some employers choose to implement furloughs due to financial hardships, whereas others lay off staffers because they are experiencing lower patient volumes.
Employers can continue to pay health plan expenses for furloughed employees. The IRS has clarified that qualified health care expenses are excluded from an employee’s gross income. In the case of furloughs, this means that premiums can be paid for laid off employees, but eligible health care claims must wait until the employee returns to work.
Other benefits may also end when a furlough begins. For example, if a daycare center closes, health care flexible spending accounts (FSAs) could be affected.
Health insurance for laid off workers can be obtained through COBRA, which is the Consolidated Omnibus Budget Reconciliation Act. However, there are a number of issues to consider before signing up for COBRA.
Employees who have been laid off are entitled to apply for unemployment. They can also seek federal or state unemployment benefits.
