Employers across all industry verticals have been hit hard by the COVID-19 pandemic. As a result, companies should do their most to take advantage of the various pandemic tax credits that have been made available during these strenuous times. It can also help to hire a knowledgeable corporate law attorney who can make the most out of your business’s tax plan.
Employee Retention Credit
The employee retention credit was created to encourage businesses to retain workers on their payroll. The tax credit results in a refund of up to 40% of up to $10,000 in wages paid by a qualifying employer who has had its business impacted by the COVID-19 pandemic. The only businesses exempted from this credit are local and state governments as well as small businesses that receive small business loans.
Qualifying employers must have their business fully or partially suspended by the government as a result of the pandemic and the employer’s gross receipts must be 50% below the comparable quarter in 2019. Employers who can retain staff during the pandemic should not hesitate to utilize this credit.
The Paid Sick Leave Credit
The paid sick leave credit was created to allow businesses to obtain a credit for a worker who cannot work as a result of either COVID-19 isolation or self-quarantine. These workers are qualified to receive paid sick leave of up to 10 days at a maximum of 80 hours at the worker’s regular rate of up to $511 a day and $5,110 in total. Employers can immediately be reimbursed for this credit by reducing the required amount of payroll taxes owed.
The Family Leave Credit
Employers can also receive a credit for workers who cannot work because the worker is caring for a family member with COVID-19 or because a child’s school or place of care is closed. Workers who fall under this category are entitled to receive paid sick leave of up to two weeks at a maximum of 80 hours at two-thirds of their regular pay rate with a cap-off at $200 a day or $2,000 in total. Qualifying employers can immediately redeem this credit, as well.
Credits are Optional
Remember, payroll tax credits are optional. As a result, eligible employers need not feel required to claim the credits. If employers do claim the credits, however, it is critical to include the amount of credits by the employer in its gross income when federal income taxes are reported. One of the best ways to decide whether these credits are worth claiming is to speak with your corporate lawyer.
Speak with a Knowledgeable Business Law Attorney
Planning for your business’s continued success is more important now than it ever was. One of the best ways to make sure that you take tax laws into full consideration is to obtain the help of an experienced business lawyer. Contact Resnick Law today to schedule a free case evaluation.