Ignore the noise by being confident in your next steps
We understand there are many sources out there reporting on COVID-19 and guidance around taking advantage of the new law’s provisions. However, with our team of advisors researching the law since the very beginning, we strive to be your single source of information as it relates to your practice. We do this so you will not waste your time and effort on portions of the bill that may not impact or even apply to your situation.
Clarification on the Employee Retention Tax Credit:
It appears almost all CWA clients will not qualify for or be impacted by the Employee Retention Tax Credit. Businesses will not know if they qualify based on a “significant decline in gross receipts” until June 30 (end of Q2). By that point, they will have already applied for and received the SBA Paycheck Protection Program (PPP) loan. Receiving the PPP loan makes them ineligible for this section. The PPP loan will be more beneficial to our clients than a potential credit of $5,000 per employee.
Please review the following details to understand how this credit would work if you don’t receive the PPP loan.
Subtitle C – Business Provisions
- Section 2301 – Employer Retention Credit for Employer Subject to Closure Due to Covid-19:
- Credit limited to 50% of employee’s wages up to $10,000 per employee ($5,000 credit maximum per employee)
- Credit will be in the form of a payroll tax credit similar to the Families First Coronavirus Response Act (FFCRA)
- If the amount of credit available exceeds the payroll tax limitation, the excess is refunded in dollars to the employer.
- Criteria—Eligible Employer Definition
- Must be in business during 2020
- Operation was fully or partially suspended during Q1 2020 due to orders from governmental authority due to Covid-19
- Definition—Significant Decline in Gross Receipts:
- If quarterly gross receipts are less than 50% of previous years’ same calendar quarter gross receipts (i.e. Q2 2020 compared Q2 2019). For most CWA clients this would be Q2 ending June 30, AND
- If quarterly gross receipts are greater than 80% previous years’ same calendar quarter gross receipts (i.e. Q3 2020 compared Q3 2019). For CWA clients this would mean after Q2 your Q3 receipts are 80% or higher than Q3 2019
- Qualified Wages:
- For employers with less than 100 FTEs, includes
- All wages paid by eligible employer in periods described above
- Does not includes wages paid out under FFCRA
- Employer paid health insurance
- Limit:
- Cannot pay any employee more than the previous 30-day equivalent in wages
- Limitations Related to PPP Loan:
- If eligible employer receives PPP Loan, such employer shall not be eligible for this credit
- If you receive the credit and receive the PPP loan the IRS will be allowed to recapture this tax credit from the taxpayer
- For employers with less than 100 FTEs, includes
Watch our CARES ACT Webinar to learn more nuances concerning the bill.
We know this is a stressful and trying time for all dental professionals. As we all navigate through this together, we ask you to do one thing; trust us. Trust your advisor, read our communications and do your best to ignore the rest of the noise.
Our team of advisors and our trusted industry partners are working around the clock to determine the best course of action for you. CWA is committed to guiding you through this.
Need someone to help you navigate the financial side of your person and professional life during this time?
