We wrote about the Employee Retention Credit previously https://wassmancpaservices.com/employee-retention-credit/. Now there is another credit to help employers, pay employees. This credit is available for business with employees and for self-employed individuals.
Employers are getting help to pay employees who have to miss work. It is allowed for employees who are unable to work including telework. The reasons for not being able to work include:
- Required quarantine, self quarantine, or coronavirus symptoms and seeking medical diagnosis
- Needing to care for somebody with the virus
- Needing to care for a child because school or daycare is closed due to virus
The reason for being unable to work should be documented by the employer. More documentation is required for self-employed individuals. This documentation should include the reason for not being able to work and any emails, doctors notes, or news articles to support that reason. Also the dates you were unable to work from and to should be documented.
The reason for the pay will determine the amount of pay per day. It also determines the maximum amount of pay that is allowed for the credit.
The credit can be claimed on the 941 for businesses with employees. For self employed individuals you should reduce your estimated tax payments. The credit will actually be calculated on the tax return for self employed individuals.
If you think your business would qualify I recommend talking to your payroll provider. For self-employed individuals I recommend talking to your accountant about how to change your estimated tax payments.
The Wassman CPA Services website and blog is meant to offer general information to our readers. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service. You should contact Wassman CPA Services for advice concerning specific matters prior to making any decisions.