This was talked about in the news but now we have more specifics on how the IRS is going to help businesses through payroll tax credits.
To qualify your business must be fully or partially suspended by a government order due to COVID-19. Also, the employer’s gross receipts must be below 50% of the comparable quarter in 2019. If you qualify and your income goes up you will no longer qualify once your receipts go above 80% of a comparable quarter in 2019.
The credit is 50% of qualifying wages paid up to 10,000 in total. Wages paid after March 12, 2020 and before Jan 1, 2021 are eligible. Wages include cash and a portion of the cost of employer provided health care.
Qualifying wages are based on the average number of employees in 2019. For employers with less than 100 employees the credit is based on wages paid to all employees, regardless of if they worked or not. For employers with over 100 employees on average for 2019 the credit is allowed for wages paid to employees who did not work during the calendar quarter.
The credit is claimed on the quarterly 941 deposits and form. You can also submit for an advance if the taxes are not sufficient enough to cover the credit by using form 7200.
If your are business owner that has had to close or partially close and your revenues are less than 50% of what they were this time last year; you should discuss with your payroll service provider how to take advantage of this credit.
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