Tag Archives: business tax preparation

Can your business benefit from the enhanced Employee Retention Tax Credit?

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Can your business benefit from the enhanced Employee Retention Tax Credit

COVID-19 has shut down many businesses, causing widespread furloughs and layoffs. Fortunately, employers that keep workers on their payrolls are eligible for a refundable Employee Retention Tax Credit (ERTC), which was extended and enhanced in the latest law.

Background on the credit

The CARES Act, enacted in March of 2020, created the ERTC. The credit:

  • Equaled 50 percent of qualified employee wages paid by an eligible employer in an applicable 2020 calendar quarter,
  • Was subject to an overall wage cap of $10,000 per eligible employee, and
  • Was available to eligible large and small employers.

The Consolidated Appropriations Act, enacted December 27, 2020, extends and greatly enhances the ERTC. Under the CARES Act rules, the credit only covered wages paid between March 13, 2020, and December 31, 2020. The new law now extends the covered wage period to include the first two calendar quarters of 2021, ending on June 30, 2021.

In addition, for the first two quarters of 2021 ending on June 30, the new law increases the overall covered wage ceiling to 70 percent of qualified wages paid during the applicable quarter (versus 50 percent under the CARES Act). And it increases the per-employee covered wage ceiling to $10,000 of qualified wages paid during the applicable quarter (versus a $10,000 annual ceiling under the original rules).

Interaction with the PPP

In a change retroactive to March 12, 2020, the new law also stipulates that the employee retention credit can be claimed for qualified wages paid with proceeds from Paycheck Protection Program (PPP) loans that aren’t forgiven.

What’s more, the new law liberalizes an eligibility rule. Specifically, it expands eligibility for the credit by reducing the required year-over-year gross receipts decline from 50 percent to 20 percent and provides a safe harbor, allowing employers to use prior quarter gross receipts to determine eligibility.

We can help

These are just some of the changes made to the ERTC, which rewards employers that can afford to keep workers on the payroll during the COVID-19 crisis. Contact us for more information about this tax saving opportunity

About the author

Brady is the owner of Ramsay & Associates. He specializes in financial statement preparation and personal, fiduciary and corporate tax and accounting.

His professional experience includes seven years' experience for local and national CPA firms before joining Ramsay & Associates in 2006.

He has a Bachelor of Accounting degree from the University of Minnesota Duluth. He is a Certified Public Accountant, a member of the Minnesota Society of CPA's, an Eagle Scout, as well as an active volunteer in the community.

Tax-Related Identity Theft: What You Need to Know

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Identity theft continues to be a growing problem, with instances of tax-related identity theft increasing every year. This can be a frustrating, time-consuming issue for taxpayers. Here are some things you need to know about tax-related identity theft.

Tax-Related Identity Theft - Ramsay & Associates
What is Tax-Related Identity Theft?

Tax-related identify theft occurs when a social security number is stolen and used to file a tax return for a fraudulent refund. Many victims of tax-related identity theft are unaware that it has occurred until they file a return and discover that one has already been filed under their social security number. In other cases, taxpayers may receive a letter from the IRS stating that they have identified a suspicious return.

For 2017, the IRS, state agencies, and the tax industry enacted new safeguards and actions to combat tax-related identity theft.

Warning Signs

It is important to know the warning signs of possible tax-related identity theft. This is especially important if the IRS or your tax professional contact you regarding:

  • Use of your social security number for more than one return
  • Additional tax owed or a refund offset, as well as collection actions taken against you, for a year that you did not file a tax return
  • IRS records that indicate wages received or other income from an unknown employer

If You Become a Victim

The Federal Trade Commission recommends these steps if you become a victim of identity theft:

  • File a complaint with the FTC at www.identitytheft.gov
  • Contact one of the three major credit bureaus to place a “fraud alert” on your credit record
  • In addition, contact your financial institutions and close any financial or credit accounts opened without your permission or tampered with by identity thieves

If you know or suspect that you are a victim of tax-related identity theft, the IRS recommends that you:

  • Respond immediately to any IRS notices by calling the number provided
  • Complete IRS Form 14039, Identity Theft Affidavit
  • File your tax return and pay any taxes that you owe; you may also need to mail paper tax returns

Ways to Protect Yourself

  • Always use security software with firewall and anti-virus protections in addition to using strong passwords
  • Learn to recognize and avoid phishing or suspicious emails, threatening phone calls or text messages from thieves posing as legitimate organizations, such as credit card companies, financial institutions, and the IRS
  • Do not follow links or download attachments from suspicious or unknown email addresses
  • Protect your personal data by securing your tax records, social security number, and credit card and banking information
  • Do not carry your social security card with you
  • Finally, remember that the IRS does not initiate contact with taxpayers to obtain personal or financial information

Find more information from the IRS Taxpayer Guide to Identity Theft.

Minnesota Department of Revenue

With an increase in scams and stolen personal information, the Minnesota Department of Revenue has stated that it is taking the time necessary to ensure that the correct refund goes to the correct person. The department reviews every return to verify information provided, and therefore, the length of time to process that return may vary from year to year.

Learn more from the Minnesota Department of Revenue. For Wisconsin, visit the website of the State of Wisconsin Department of Revenue.

 

Tax-related identity theft may also occur when thieves use a stolen Employee Identification Number from a business to create fraudulent W-2s. The accounting and tax professionals at Ramsay & Associates can assist taxpayers with individual and business tax-related identity theft – both with taking preventive actions and correcting any issues after identity theft occurs. Contact us for more information or to schedule an appointment.

About the author

Brady is the owner of Ramsay & Associates. He specializes in financial statement preparation and personal, fiduciary and corporate tax and accounting.

His professional experience includes seven years' experience for local and national CPA firms before joining Ramsay & Associates in 2006.

He has a Bachelor of Accounting degree from the University of Minnesota Duluth. He is a Certified Public Accountant, a member of the Minnesota Society of CPA's, an Eagle Scout, as well as an active volunteer in the community.

2016 Income Tax Returns Information

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2016 Income Tax Returns - Ramsay & AssociatesThe calendar has turned to 2017. It’s time to start preparing for 2016 income tax returns if you haven’t already done so. We’ve put together some helpful information and dates to keep in mind as you prepare your return.

Tax Season Begins

Monday, January 23, 2017 is the official start of tax season, when the IRS will begin accepting electronic returns. Of the 153 million tax returns expected to be filed this year, the IRS estimates that four of five will be prepared electronically, using tax preparation software. The IRS will begin processing paper returns that day as well.

Tax Documents Mailing Deadlines

Tuesday, January 31, 2017 is the mailing deadline for most important tax documents, including Forms W-2 and 1099 and bank interest or retirement account distribution documents. The mailing deadline for Forms 1099-B (sales of stocks, bonds, or mutual funds), 1099-S (real estate transactions) and 1099-MISC is Wednesday, February 15, 2017.

Tax Return Deadline

Tuesday, April 18, 2017 is the deadline to submit your 2016 tax return or file an extension. The traditional tax deadline of April 15 falls on a Saturday this year. Typically, the deadline would be extended to the first Monday following the 15th; however, Monday, April 17 is Emancipation Day, a legal holiday in Washington, D.C., and federal offices will be closed.

Extended Tax Deadline

Monday, October 16, 2017 is the extended tax deadline for individual returns. Anyone can file for a six-month extension, which gives you additional time to file your return, but does not give you additional time to pay if you owe a balance. Form 4868, the application for an extension, has a submission deadline of April 17.

Refunds

According to the IRS, the fastest and safest way to file and receive a refund is to choose e-file and direct deposit. Typically, the IRS process nine out of 10 refunds in fewer than 21 days. In 2017, however, a new law goes into effect requiring the IRS to hold refunds until at least February 15 on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). The IRS cautions taxpayers that these refunds most likely will not arrive in bank accounts until the week of February 27.

The IRS offers two helpful tools for taxpayers to check the status of their refund: Where’s My Refund? via irs.gov, and the IRS2Go phone app.

Ramsay & Associates offers both personal and business tax preparation and planning services. We pride ourselves on our attention to detail and expert knowledge. Please contact us if you would like more information or to schedule an appointment. Call us at 651.429.9111.

About the author

Brady is the owner of Ramsay & Associates. He specializes in financial statement preparation and personal, fiduciary and corporate tax and accounting.

His professional experience includes seven years' experience for local and national CPA firms before joining Ramsay & Associates in 2006.

He has a Bachelor of Accounting degree from the University of Minnesota Duluth. He is a Certified Public Accountant, a member of the Minnesota Society of CPA's, an Eagle Scout, as well as an active volunteer in the community.