Amid the troubled waters during the COVID-19 pandemic, the IRS introduced the Employee Retention Credit (ERC) to aid businesses and retain employees.
But, as a business owner in Georgia, have you really grasped the ERC's essence? Are you versed in eligibility and precise calculation?
For tailored expert help, explore our ERC attorneys page and get in touch with us to see how we can maximize your ERC benefits and guide you through that dreaded audit.
Otherwise, our comprehensive employee retention tax credit guide below is a compass through the ERC intricacies.
What is the ERC in Georgia?
The ERC in Georgia offers vital tax relief for businesses impacted by COVID-19. It's a credit that grants 70% of qualified wages paid to employees from March 13, 2020, to December 31, 2021, maxing at $7,000 per employee per quarter, aiding businesses that retained employees amid the pandemic challenges.
Does Georgia allow the ERC credit?
Yes, Georgia allows the ERC credit since it’s a nationwide credit governed by the IRS rather than the Georgia Department of Revenue. With this in mind, all aspects of the ERTC apply exactly the same from state to state rather than there being any state nuances.
Eligibility for the Georgia ERC grant
To qualify for the Georgia ERC grant, your business qualifies if it:
- Faced either a full or partial suspension of business activities due to government orders, or
- Encountered a notable decline in gross receipts.
These ERC qualifications sound simple on the face of it, but you need to be especially sure you qualify before calculating your entitlement and then applying.
The ERC Georgia calculation
The ERC calculation for Georgia is both simple and complex, but the calculation for 2021 and 202 vary, so please ensure you take your time working out how much you can claim.
For 2021, qualifying entails:
- Meeting financial setback criteria
- Employing fewer than 500 staff
- Identifying qualifying wages
- Timely filing returns
Regarding ERC Georgia credit limits, eligible wages are capped at $10,000 per employee per quarter, with the credit pegged at 70% of these wages.
The GA ERC in 2020 adheres to similar guidelines, but with a calculation rate of 50%, compared to the 70% for 2021. Notably, companies with over 100 employees in 2020 aren't eligible for the ERC. These nuances underscore the significance of understanding ERC specifics for Georgia businesses.
Applying for the Georgia ERC credit
Eligible employers for the Georgia ERC credit will report their total qualified wages and corresponding health insurance expenses for each quarter within the ERC application.
Specifically, most employers, starting from the second quarter, will use Form 941 for this. The credit functions by offsetting the employer's share of Social Security tax, with any excess amount eligible for refund as usual.
PPP & the Georgia Employee Retention Credit
The IRS's recent news release holds particular relevance for the Georgia Employee Retention Credit, as it now permits deductions for the payments of eligible expenses when such payments would result (or be expected to result) in the forgiveness of a loan (covered loan) under the Paycheck Protection Program (PPP).
With regional considerations in mind, amendments were made to the guidance of the CARES Act. This ensures that "no deduction is denied, no tax attribute is reduced, and no basis increase is denied by reason of the exclusion from gross income of the forgiveness of an eligible recipient’s covered loan."
The previous stance that prohibited deductions for eligible expense payments linked to loan forgiveness is now obsolete in Georgia, as with all other US states.
And so, this confirms that businesses can simultaneously claim the ERC and PPP benefits at the same time. However, it's crucial to be aware of potential pitfalls associated with combining these benefits and to navigate them carefully.
Nonprofits & the Employee Retention Credit in Georgia
In Georgia, the scope of employee retention tax credits extends to nonprofit organizations, including churches, mirroring their applicability to conventional small businesses.
Even so, nonprofits claiming the Employee Retention Credit in Georgia must satisfy specific criteria, such as the government mandate test and the gross receipts test, to qualify.
Claiming the ERC for nonprofits in Georgia involves filing Form 941-X, with the credit amount declared on Form 990. The actual credit is contingent upon the total of qualified wages and the count of employees.
Is the ERC taxable in Georgia?
No, the ERC isn’t taxable in Georgia. However, they can impact payroll deductions, affecting your taxable profits.
With this in mind, answering the question of, "is ERC taxable income”, means grasping how the ERC connects with taxable income for accurate reporting on applicable tax forms like 1120-S and 1065.
The impact of the ERC on tax returns varies based on factors including the credited amount, payroll expense deductions throughout the year, and the specific business entity classification.
Audits & the GA ERC deduction
When operating in Georgia, it's crucial to ensure accurate GA ERC deduction claims in alignment with IRS guidelines.
Despite the possibility of an ERC audit, proactive measures can prevent initial occurrences and prepare your business if faced with that dreaded audit.
In our detailed guide, we walk you through:
- Avoiding audits in the first place
- What the Statute of Limitations is for ERC audits
- Responding to audit notifications effectively
- What to do when facing an audit
Scams relating to the Georgia business ERC grant
Sadly, Employee Retention Credit scams are on the rise.
The IRS has issued warnings about these scams, underscoring the importance of tax compliance and vigilance when engaging with third-party entities.
While the Georgia business ERC grant is a legitimate refundable tax credit, it's crucial to stay informed about these prevalent scams:
- Phone calls: Scammers contact employers by phone, making false claims about ERC eligibility, and may charge excessive fees for unnecessary services, regardless of actual eligibility.
- Collections: Fraudsters file ERC claims on behalf of businesses, keeping a substantial part of the credit for themselves.
- Identity theft: They target ineligible businesses, gather sensitive data, and use stolen identities to fraudulently apply for the credit.
To safeguard against ERC scams, businesses in Georgia should:
- Collaborate with trusted tax professionals
- Ensure you’re eligible yourself
- Maintain direct communication with verified advisors (such as the Brotman Law team)
- Be cautious of unsolicited advice or unrealistic promises
By adopting these measures, businesses can prevent fraud, ensure compliance, and shield themselves from falling victim to scams.
How Brotman Law can help
Navigating the complexities of the Employee Retention Credit and ensuring compliance with tax regulations can be challenging.
Brotman Law, with our team of skilled ERC tax attorneys, specializes in providing expert guidance tailored to your business needs.
Our experienced team can assist you in understanding ERC eligibility, optimizing your claims, and helping you through an ERC audit to avoid penalties and fines.
Contact us today to get the support you need from our dedicated ERC tax attorney team.
Final points on the GA Employee Retention Credit
The GA Employee Retention Credit offers substantial financial relief for businesses and nonprofits affected by the COVID-19 pandemic.
However, understanding eligibility rules and qualified wages, which vary based on employer size, can be complex.
Moreover, vigilance is necessary to avoid falling victim to prevailing scams targeting vulnerabilities.
To navigate these challenges effectively, simply reach out to us. Our tailored guidance can help determine eligibility, maximize your credit, and protect you from potential scammers.
Contact us today for Georgia-specific assistance in securing your financial well-being.
The US states we support through the ERC