Can't figure out how the ERC Missouri grant works? How do you ensure compliance and understand tax consequences?
If this resonates with you, you're not alone. Even though the ERC involves a set of intricate rules, there is a way to simplify it.
At Brotman Law, we understand the complexities of the ERC and have created an informative guide to help you understand how it works in Missouri. For ERC audit assistance or expert guidance, our ERC attorneys are here to support you.
Alternatively, continue reading to gain a thorough understanding of the ERC in Missouri; we are committed to supporting you all the way.
What is the ERC credit in Missouri?
The ERC credit in Missouri is a tax credit aimed at helping businesses that retained their employees during the COVID-19 pandemic, up to $7,000 per employee per quarter for qualifying wages paid to employees from March 13, 2020, through December 31, 2021.
Eligibility for the Missouri ERC credit
To be eligible for the ERTC in Missouri, businesses must meet certain qualifications:
- A significant decline in gross receipts, or
- Business must have been fully or partially suspended due to lockdown orders.
It's important to note that there are specific calculations and thresholds to determine the eligibility for the credit, for which you can refer to our complete guide on ERC qualifications.
The ERC Missouri calculation
The ERC Missouri calculation is taking the applicable credit percentage for the relevant year (70% for 2021 and 50% for 2020) of the qualified wages for each employee.
The qualified wages include:
- Cash wages
- Health plan expenses
It's important to refer to the official guidelines and instructions provided by the Missouri Department of Revenue for accurate calculations. In our guide on ERC calculation, we provide a detailed explanation of how it’s calculated.
Applying for the Missouri ERC grant
Applying for the Missouri ERC grant is a straightforward process:
- Check your head count for the relevant periods
- Evaluate the extent of which your operations were suspended
- Work out your qualifying wages
- Use Form 941 to submit your application
The application typically requires information such as:
- Employer's identification number
- Number of employees
- Wages paid to qualified employees
We recommend that employers should carefully review the application instructions and guidelines to ensure accurate and timely submission. For more information on how to apply, refer to our detailed guide on the ERC application.
PPP & the Missouri employee retention credit
The PPP (Paycheck Protection Program) provides loans to help businesses retain their employees, while the Missouri ERC credit offers tax credits for qualified wages paid to retained employees.
These two resources can be combined to provide considerable relief to businesses facing financial challenges.
Due to potential risks, combining these benefits should be approached with caution. To learn more about how the PPP and the Missouri employee retention credit can work together, this ERC PPP guide will help.
By leveraging both programs, businesses can maximize their financial support.
Nonprofits & the employee retention credit in Missouri
Good news for nonprofits in Missouri — the employee retention credit can also support their workforce. With this credit, qualified wages are paid to retain employees who are eligible for tax credits, giving nonprofits an excellent opportunity to obtain financial assistance.
The criteria for nonprofits remains the same as it does for regular entities, in such that they have to meet these tests:
- Government mandate test
- Gross receipts test
Nonprofits will need to file Form 941-X and also declare the amount on Form 990, with the credit amount depending on the “qualified wages” and the number of employees retained during the relevant quarter.
If you're interested in learning more about how the ERC can benefit nonprofits in Missouri, check out our ERC for nonprofits guide, where you'll find much more in-depth information.
Is the ERC taxable income in Missouri?
No, the ERC isn’t taxable income in Missouri. The credit isn’t classed as business income but is a tax relief, so doesn’t fall under the realms of being taxable. However, it will affect payroll deductions, so taxable profits will be affected in that sense.
And so, you’ll need to understand how the ERC and taxable income interact with each other in more detail. Doing this will allow you to declare the correct figures on Forms 1120-S and 1065.
For more information regarding the taxability of the ERC in Missouri, see our guide on "is ERC taxable income?" It provides further details and insight into the specific considerations and outcomes of taxing the ERC.
Navigating employee retention credit Missouri audits
Audits are an important aspect of tax compliance, and the employee retention tax credit in Missouri (ERC) is no exception.
As with any tax credit or incentive program, there is a possibility of being audited to ensure that businesses have properly claimed the ERC and followed all the necessary guidelines.
During an ERC audit in MO, the IRS will review your documentation and records to verify the eligibility and accuracy of the claimed credit.
Businesses must maintain thorough and accurate records related to the employee retention tax credit in MO, especially supporting evidence for the qualified wages paid. As a result, businesses will be able to provide the required information and navigate the audit process more efficiently.
If your business has been notified of an ERC audit in Missouri, we highly recommend you get in touch with the team here at Brotman Law so we can help you navigate the process.
Scams to be aware of
Sadly, scams and fraudulent activities are on the rise from third parties relating to the ERTC. The unfortunate reality is that scammers view these programs as opportunities to exploit vulnerable people and businesses.
Common scams to be aware of are:
- Offering to help file claims in exchange for a fee
- Personal information requests
- Companies that claim to be legitimate (promise to accelerate the claim process or increase credit.)
Businesses should be vigilant and take necessary precautions to avoid falling victim to employee retention credit scams.
Whenever possible, you should:
- Verify the legitimacy of any company or individual offering assistance or requesting sensitive information.
- Avoid disclosing personal or financial information to people you don't know or who are unreliable.
More information can be found in our employee retention credit scams guide, which provides helpful insight and warning signs to help businesses avoid fraudulent schemes.
How Brotman Law can help you
When it comes to dealing with the complexities of the employee retention credit (ERC) in Missouri, having the right guidance can make all the difference.
ERC tax attorneys understand the complexities of tax law and can render expert assistance suited to your situation. Whether you need help determining your eligibility, calculating your qualified wages, or defending your claims during an audit, our team is ready to provide their expertise.
By working with a dedicated ERC tax attorney from Brotman Law, you can ensure that your ERC claims are accurate, compliant, and optimized to provide the maximum benefit for your business. As part of the process, we will review your records, negotiate with tax authorities, and provide ongoing guidance and support.
Contact Brotman Law today and schedule a consultation with an experienced ERC tax attorney.
While the ERC is simple on paper, there are intricate details you need to be aware of to avoid facing an audit and penalties.
It all starts with eligibility, ensuring you’re calculating qualifying wages correctly and keeping thorough and accurate records to back this up. If you end up being audited, having all the information available will make the process much smoother.
You can count on our team of experts at Brotman Law to provide expert guidance and support if you need it. Working with an experienced tax attorney will enable you to take advantage of the benefits of the ERC.
The US states we support through the ERC