For those who qualify, (see below) the Employee Retention Credit (ERC, or ERTC) is still active. The IRS is simply pausing the processing of those claims. Here is a brief overview of the ERC for those who may need a refresher.

The Employee Retention Credit (ERC or ERTC) is a complex tax credit provided by the IRS for businesses and tax-exempt organizations that continued to pay employees during the COVID-19 pandemic, especially when facing shutdowns or experiencing a required decline in gross receipts in 2020 and 2021. However, the IRS has identified issues with aggressive marketing and misinformation, leading to ineligible claims for the ERC. To assist taxpayers in determining their eligibility accurately, the IRS has created a detailed question-and-answer chart.
Part A: Checking Your Eligibility

1. Operational Status and Employee Payments:
   
   • The first step involves confirming whether a business or tax-exempt organization operated a trade or business, had employees, and paid wages between March 13, 2020, and December 31, 2021. Household employers are not eligible for the ERC.
2. Gross Receipts Decline:
   
   • Eligibility hinges on whether the trade or business experienced the required decline in gross receipts during specific eligibility periods in 2020 or the first three quarters of 2021. If yes, the organization may be eligible, but further confirmation of the decline is necessary.
3. Supply Chain Issues:
   
   • If the ERC is being claimed due to supply chain issues, caution is advised. A supply chain disruption alone doesn't qualify, and detailed scrutiny of the supplier's government order is essential.
4. Business Suspension by Government Order:
   
   • The organization must determine if its operation was fully or partially suspended by a government order due to the COVID-19 pandemic in 2020 or the first three quarters of 2021. The suspension must be due to a government order and not merely guidance, recommendation, or statement. Eligible periods are limited to when the government order was in effect and operations were suspended.
5. Recovery Startup Business (RSB):
   
   • For businesses initiated after February 15, 2020, with $1 million or less in average annual gross receipts for the prior three tax years and not qualifying under the gross receipts or suspension tests, there may be eligibility. RSBs have limitations on the maximum ERC per quarter and are eligible only for the third and fourth quarters of 2021.

Part B: Claiming the ERC if Eligible
If the eligibility questions lead to this part, the organization may qualify for the ERC. Thorough record-keeping, including wages paid, gross receipts, government orders, and other required documents, is crucial. Assistance from a trusted tax professional is recommended, and additional information is available at IRS.gov/erc.
Part C: Resolving an Incorrect ERC Claim
If an incorrect ERC claim has been made, the IRS provides a withdrawal process outlined at IRS.gov/withdrawmyerc. This process is applicable if certain conditions are met, including making the claim on an adjusted employment tax return, filing the adjusted return only for the ERC claim, and not cashing or depositing the refund check. The IRS is also working on guidance for employers who were misled into incorrectly claiming the ERC and received the credit. Regular updates on IRS.gov/erc are advised for the latest information.
In conclusion, the ERC is a valuable credit for businesses and tax-exempt organizations, but it is crucial to navigate the complex eligibility criteria accurately to avoid potential repercussions for incorrect claims. The IRS emphasizes its commitment to helping taxpayers while preventing incorrect ERC claims and fraud.

Ironically, the 2023 tax season starts today on January 23rd. Another year of putting the correct numbers in the correct boxes and filing by the correct due date. Those numbers however, have a greater emotional meaning to you the taxpayer. Numbers such as total income can drag your ego and pride into the mix when you have a banner year. It makes for an exciting yet stressful situation when you have a great year but did not plan accordingly. Will I owe taxes on the income or will I be able to minimize my tax burden are the questions revolving around in your head.

Did I make a tax plan ahead of time to address the increase in income?

When you are only putting the correct numbers in the correct boxes by the correct due date, you are selling yourself short and possibly leaving your hard earned dollars to the IRS. The goal is to bring those numbers to life, recognize them and celebrate them. What better way to accomplish this than by building a tax plan during the year so there are no surprises at tax time. 

Feel free to contact us if you would like to partner with more than a tax professional that puts the right numbers in the right boxes by the right due date to build a lasting relationship to save your hard earned dollars and bring meaning to your numbers.

Here's to a less "taxing" filing season. 

According to a recent study by Allianz Life Insurance, 54% of American workers have cut or stopped their retirement contributions to combat the rising prices of inflation. With inflation being at a 40-year high, many taxpayers  are also taking early withdrawals from those same accounts to make ends meet. 

Inflation can affect a great deal of decisions for taxpayers including when to make tax payments. If the IRS underpayment rate is lower than the US inflation rate, it may pay to wait until a later date with dollars that are worth considerably less. Those same tax dollars could be used for many other things including charity, real estate strategies or other retirement planning. 

If you need any assistance with tax planning for inflation, feel free to give us a call.

#inflation #taxes #taxplanning #intheblack

By now many of you have heard about the GameStop/Robinhood stock market news floating around social media sites like Reddit and TV lately. If not, instead of going on and on about short positions and mark-to-market. Here's a quick video that explains it all:

If that video is as clear as mud, or has you thinking you need to go trim your hedges outside, then let's add another wrinkle. What happens when the taxman comes knocking after you have sold your GameStop stock for a gain?

Stocks sold for a gain (buy low, sell high) are called capital gains income and is taxable. Stocks held for less than a year have short-term capital gains and stocks held for a year or long have long-term capital gains. Short-term capital gains are taxed at the ordinary rate which is typically higher than the long term rate. Short-term gains will be included with your other ordinary income (W-2, 1099, etc) and you will pay tax based on your marginal tax rate and income.

The key to lowering your tax with stock sales is to create a strategy that will enable you to pay lower taxes on capital gains. Some strategies include:

• Long-term gains that provide more favorable tax treatment
• Utilize losses to offset gains
• Various stock sales and other year-end tax strategies

It it also important to note that with the change in the Presidential Administration, your stock tax plans will need to be devised in concert with your other personal and business tax situation(s). 

Feel free to contact us if you need assistance with your stock tax strategies, small business tax, or tax planning. If you need new hedges, I may know a good landscaper.