Changes in Employee Retention Tax Credits in Build Back Better Act
Kruze’s tax team helps hundreds of startups cumulatively save millions on their taxes every year – even unprofitable startups can benefit from tax credits. See how much a tax return might cost your company at https://kruzeconsulting.com/startup_calculators/how-much-does-a-startup-tax-return-cost
Hey, it’s Scott Orn at Kruze Consulting. And today I’m talking about changes, in the Employee Retention Tax Credits, that are in the Build Back Better Act. Now, if that is not a tongue twister, I don’t know what is.
But the Biden Administration just signed in a bunch of tax reform and there’s some good things and some bad things in there for startups. The good thing is, one of the tax credits, the new Recovery Startup Business Tax Credit, which basically gives up to $50,000 in payroll taxes on a quarterly basis to startups that were formed after February 15th, 2020. So basically, if you were formed after COVID started, you are eligible for a $50,000 tax credit. It’s been going on in Q3 already, we’ve already been doing tons of these, but Q4, it is preserved. You will still be able to get that up to $50,000 tax credit in Q4.
It’s based on, I think it’s capped at $5,000 per employee. So you kind of need to have like 10 engineers basically, or 10 people, not just engineers, to be eligible for that. But that is preserved that will go forward in Q4, if you are a relatively new company, and formed after February 15th, you will be in… February 15, 2020, you’ll be in good shape and can get that. So talk to your friendly CPA, don’t have a CPA, you know where to find them at kruzeconsulting.com, shameless plug there. But, there’s some bad news, and, there was another form, like kind of the earliest form of Employee Retention Tax Credit, which was in 2020 and even the first half of 2021. That has been eliminated for Q4.
Those were based on reductions in revenue, and there’s different thresholds every quarter, some quarters it was 50%, some quarters it was 25%. Also, if your company shut down because of COVID, you were eligible, you know, that’s like truly shut down, not like, “Hey, we’re working from home and deploying code to get up.” “We’re working remotely” kind of thing. But unfortunately, that one has been eliminated. So that was a substantial tax credit for a lot of companies that were really hurting. But they probably have been taking advantage of those tax credits for at least a year now. So I think Congress probably said, “Hey, we can save a little money here by getting rid of this one. But let’s preserve the one that benefits startups that were formed after February 15th, 2020, because hey, that was a really tough time to start a company.
We want to support those businesses start early, and we want to encourage them to hire.” So I think that’s the logic around this, but, the headline is, if you are a new recovery startup business, you’re still eligible for that $50,000 tax credit Q4. If you were a company that was really struggling and were dependent on a tax credit because, or we’re eligible for tax credit because you had a material revenue decrease or had shut down the offices or things like that, then, that one’s not going to be available for you in Q4.
Other interesting stuff in the Build Back Better legislation that I’ll cover in some other videos. But this is how it impacts the Employee Retention Tax Credits. Hope that helps. If you have any questions, hit us up at kruzeconsulting.com.
We’re very active on the Employee Retention Tax Credits. We’re literally filing hundreds of these, so we know how to do it and we can help you out. Hit us up. Thanks!
![$50,000 Small Business Grant For Black Business Owners (2022) [Video]](https://wealth-management.teslawm.com/wp-content/uploads/2022/06/mp_79628_0_0jpg.jpg)
![REPORT: Robert Quinn Standoff With Bears Has Officially Begun [Video]](https://wealth-management.teslawm.com/wp-content/uploads/2022/06/mp_80847_0_RobertQuinnpng.png)
![NEW $48B RRF Small Business Grants in the works ( Late night Update ) [Video]](https://wealth-management.teslawm.com/wp-content/uploads/2022/06/mp_79179_0_0jpg.jpg)
![BREAKING: SBA EIDL, ERTC, PPP, GRANTS, Q&A | STIMULUS UPDATE | MAY 31 | SHE BOSS TALK [Video]](https://wealth-management.teslawm.com/wp-content/uploads/2022/06/mp_77917_0_0jpg.jpg)