End of July Brings Filing Deadline for Employee Tax Retention Credit (ERTC).

Jun 15, 2023

Don’t leave money on the table!

The Employee Retention Tax Credit (ERTC) is a provision established under the CARES Act which has been enhanced by additional legislation and could provide an immense amount of capital to employers. However, time is running out for business owners to claim what could amount to thousands of dollars in tax refunds.

The ERTC is a refundable tax credit employers can claim against certain quarterly employment taxes, equal to a percentage of qualified wages and health insurance costs paid after March 12, 2020, and before September 30, 2021. For 2020, the credit is 50% of qualified payments, up to $10,000 per employee. Simply put, an eligible business has the potential to request refunds of up to $5,000 per employee for 2020. The benefits are even greater in 2021.

But that means in order to claim the credit for those last three quarters of 2020, business owners need to act now. Tax payers have up to three years to amend their quarterly returns. By amending a return, business owners may unlock substantial benefits to support their business’s growth.

Business Eligibility
For most businesses, eligibility for ERTC for fiscal year 2020 is determined by meeting one of two tests:

  • Test 1: A measure of decline in gross receipts. If an employer experiences a significant decline in gross receipts for any calendar quarter, as compared to the same calendar quarter in 2019, they will be eligible for the credit in that quarter. For 2020, this decline is defined as gross receipts that are less than 50% of gross receipts for the same quarter in 2019, and for 2021, this decline is gross receipts being less than 80% of gross receipts for the same quarter in 2019.
  • Test 2: A full or partial suspension of operations. If an employer was subject to any full or partial suspension of operations because of government orders related to COVID-19 they could be eligible. These orders could be Federal, State, county, and/or municipality. Even if the business was deemed essential and was not directly affected by such orders, there still could be avenues to be eligible for the credit.

Filing Deadline

Despite the expiration of the tax credit in September 2021, eligible businesses, companies, and employers have the opportunity to submit documentation and retrospectively obtain reimbursements for the Employee Retention Credit in 2023. In order to accomplish this, business owners are required to complete IRS Form 941-X, which serves as a means to rectify any errors in their initially submitted Form 941. However, it is important to note that this process is only applicable within a three-year timeframe from the original filing of their payroll tax returns.

With the number of ERTC scams on the rise, WVC always recommends that businesses consult with their trusted tax professional to ensure eligibility, understand the specific requirements, and navigate the amendment process successfully. Connect with William Vaughan Company’s ERTC team today to see if your business meets the eligibility requirements – by acting now, you just may position your businesses for a brighter financial future.

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Mike Hanf, CPA, CGMA
Tax Partner, ERTC Practice Leader

wvco.com

Categories: Other Resources, Tax Planning

Ohio’s TechCred Program

Mar 19, 2023

Ohio’s TechCred program is a state-backed initiative designed to fuel growth and innovation in the state’s technology industry. Launched in 2019, the program helps Ohioans earn industry-recognized credentials that align with the skills that businesses need. The program is designed to address the skills gap in Ohio’s workforce by upskilling employees and preparing them for the jobs of the future.

Ohio’s TechCred Program gives employers the chance to upskill current and future employees. Employers who submit successful applications will be reimbursed up to $2,000 per credential earned and allows for up to $30,000 per employer, per funding round. Reimbursable costs include those related to tuition, lab fees, manuals, textbooks, and certification fees.

How does the program work?
After determining which new credentials will be most beneficial to the business, the employer must partner with an eligible provider, such as a university or tech school, that offers the appropriate training. Once a provider is selected, the employer is ready to apply for the TechCred program at the Ohio.gov website. Employers must file reimbursement applications within six weeks of each employee completing a credential. For a full list of qualifying credentials and providers, click here.

Who is eligible?
Any Ohio registered employer that employs Ohio resident W-2 employees is eligible to apply. Employers of all sizes and in all industries are encouraged to apply. Only one application will be accepted per employer per application period.

To learn more about Ohio’s TechCred program, visit techcred.ohio.gov or download their program guidelines here.

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wvco.com | 419.891.1040

Categories: Tax Compliance

Claiming Casualty & Theft Losses on Return

Mar 12, 2023

Natural disasters, thefts, and other unexpected events can cause significant financial losses for individuals and businesses. Fortunately, the IRS has provided some relief through tax deductions for designated damages. However, there are specific criteria that must be met in order to claim these deductions along with specifications for reporting them on your return. Here are some of the most common questions and answers to claiming casualty & theft losses on your return.

How do I know if my loss qualifies?
You can only deduct casualty and theft losses if they’re directly the result of an event that’s a federally declared disaster. Meaning, the President of the United States has officially declared the event a disaster. Federal disasters are often declared for areas heavily impacted by hurricanes, tornadoes, or floods. To view all federally declared disasters and related information, visit the IRS website.

There are 3 types of deductible losses allowed under the umbrella of federally declared disasters:

1. Federal casualty loss: The loss of personal use property due to a federally declared disaster. The loss must have occurred in the state receiving the disaster declaration.

2. Disaster loss: The loss of personal use or business property resulting from a federally declared disaster that occurred in a county eligible for public or individual assistance, or both.

3. Qualified disaster loss: The loss of personal use property due to a disaster declared under Section 401 of the Stafford Act, or several specific natural disasters or time periods.

Do theft losses qualify for deductions?
The IRS defines theft as the act of taking or removing property with the intention of depriving the owner of it. The act must also be illegal under state law. But as with the case of a casualty claim, the theft must have occurred due to a presidential disaster area declaration. For example, your city is struck by a tornado and the President declares it a disaster area. Subsequently, a thief accesses your home through a window broken by the storm and steals your car. One could argue the loss of the car was from theft due to a disaster.

Can I deduct a loss covered by insurance?
No, you cannot deduct casualty and theft losses covered by insurance, unless you file a timely claim for reimbursement and you reduce the loss by the amount of any reimbursement or expected reimbursement. For more information, please review IRS Publication 547.

How do I calculate my loss?
Personal casualty and theft losses attributable to a federally declared disaster are subject to the $100 per casualty and 10% of your adjusted gross income (AGI) limitations unless they are attributable to a qualified disaster loss. Personal casualty and theft losses attributable to a qualified disaster loss are not subject to the 10% of the AGI limit and the $100 limit is increased to $500. An exception to the rule above, limiting the personal casualty and theft loss deduction to losses attributable to a federally declared disaster, applies if you have personal casualty gains for the tax year.

What form do I use to claim this deduction?
Casualty and theft losses are first reported and calculated on Form 4684. You will then report them on Form 1040, Schedule A.

Can I itemize this deduction?
For tax years 2018 through 2025, you can no longer claim casualty and theft losses on personal property as itemized deductions, unless your claim is caused by a federally declared disaster.

For tax years 2018 through 2025, personal casualty and theft losses may be deductible when: they are attributable to a federal disaster. For tax years beginning before 2018 and after 2025 personal casualty and theft losses may be deductible even if they are not attributable to a federal disaster.

In conclusion, claiming casualty and theft losses on your tax return can provide some relief for individuals and businesses that have suffered unexpected financial losses. It’s important to remember that only losses directly resulting from federally declared disasters are eligible for deduction. As with any tax-related issue, it’s always best to consult with your WVC tax professional to ensure that you are following the appropriate guidelines and maximizing your deductions.

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wvco.com

Categories: Tax Planning

Best Practices for Scanning Tax Documents With A Mobile Device

Mar 02, 2023

Every year, tax season requires clients to share large amounts of data – mostly in the form of paper documents. As technology has evolved, so have the ways in which we share and collect personal files. The use of electronic document exchange software has become the standard for most accounting firms as it is quick and easy.

While most people don’t have a personal document scanner, almost everyone has a mobile device. This year we wanted to share best practices for scanning your tax documents so they are legible and compatible with our tax preparation software.

Image Files (.jpg, .png, .tiff, etc.) are not the best option
Many times, we receive documents as pictures or images which have been taken utilizing the camera app on your mobile device or tablet. Typically, photo/image file types utilize compression to reduce the size of the file for ease of upload. However, this compression results in a loss of quality, which ultimately makes the file harder to read. Instead, you can use your same mobile device or tablet to scan and submit documents in a PDF format! See below for tips!

Why are PDF files optimum?
When you create a PDF file containing data such as paragraphs, images, numbers, graphs, tables, etc., it will always display that data in the exact same way no matter where you are viewing it. PDF files also have universal compatibility meaning most modern browsers are fully capable of opening and displaying PDF files, and most modern operating systems come with basic pre-installed apps to open PDFs with ease.

Tips for creating PDF files
We have provided some resources below for your convenience. You can also do an internet search for your exact phone model for additional scanning options as well as where to find support for scanning from a mobile device.

Finally, as you’re working to prepare your tax records for the current filing season, take the time to connect with your tax professional to avoid any surprises and to ensure you have all the necessary documents to meet your filing deadlines. We do not require our clients to send documents electronically, you can still provide your files to us directly in paper form. We will provide you with your original documents when we complete your tax return but we always encourage you to make a copy of your files for safekeeping.

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Categories: Tax Planning

USDA Revenue Loss Assistance Programs For Agricultural Producers

Feb 07, 2023

At the end of last year, the U.S. Department of Agriculture (USDA) announced its plan to launch the Emergency Relief Program (ERP) Phase Two, as well as the new Pandemic Assistance Revenue Program (PARP). These two disaster programs were developed to help offset crop and revenue losses for agricultural producers. Just last month, the USDA announced its Farm Service Agency (FSA) is now accepting applications for both of these programs through June 2, 2023. Below are some of the key details to know before applying. For a full listing of all the guidance and qualifications, visit the USDA’s website.

Emergency Relief Program (ERP) Phase Two

  • ERP Phase Two is for producers who didn’t receive assistance from ERP Phase One.
  • Eligibility for assistance through this program is based on revenue losses experienced from eligible natural disasters in 2020 and 2021.
  • Producers should begin reviewing the following documents in preparation for applying for ERP Phase Two:
    • Schedule F (Form 1040)
    • Profit or Loss from Farming (or similar tax documents for tax years 2018-2022, representing their applicable Benchmark Year and Tax Year for Disaster Year Revenue)

Pandemic Assistance Revenue Program (PARP)

  • PARP provides financial assistance for producers who suffered at least a 15% decrease in allowable gross revenue for the 2020 calendar year, as compared to 2018 or 2019.
  • Producers may be eligible for assistance through PARP for a range of agricultural commodities and allowable gross revenue sources.
  • Other notable eligibility requirements include:
    • Must be a citizen of the United States, a resident alien, a partnership or organization structure organized under state law, an Indian Tribe or Tribal organization, or an eligible foreign person or foreign entity
    • Have an average adjusted gross income (AGI) of less than $900,000 for tax years 2016, 2017, and 2018
    • Comply with provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions.
    • Submit a complete PARP application form (FSA-1122) and provide all required documentation.

Next Steps:

Applications for each program are due June 2, 2023. Producers can apply for both programs during the same appointment with USDA’s Farm Service Agency (FSA).

For more information, producers should contact their local USDA service center or reference the ERP Phase Two-PARP Comparison Fact Sheet.


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Jeffery Long, CPA
Partner

Categories: Agribusiness

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