Employee Retention Tax Credit for Elder Care Facilities: Eligibility and Benefits

The Employee Retention Tax Credit (ERTC) is a refundable payroll tax credit that is available to qualifying for-profit and tax-exempt organizations. This tax credit was introduced in 2020 as a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help businesses retain their employees during the COVID-19 pandemic. The credit can be claimed by eligible employers who have experienced a significant decline in gross receipts or have been fully or partially suspended due to government orders related to COVID-19.

Many senior living and long-term care facilities may have overlooked their eligibility for the ERTC. However, these organizations can benefit from the tax credit and reduce their payroll tax liability. Long-term care facilities that have faced a decline in gross receipts or have been partially suspended due to COVID-19 can claim the credit. The credit can be applied to qualified wages paid to employees between March 12, 2020, and December 31, 2023.

The ERTC can be a valuable resource for elder care facilities to retain their employees and reduce their payroll tax liability. However, it is important to note that certain eligibility criteria must be met to claim the credit. In this article, we will explore the employee retention tax credit for elder care facilities and provide information on how these organizations can claim the credit.

Understanding Employee Retention Tax Credit

The Employee Retention Credit (ERC), also known as the Employee Retention Tax Credit or ERTC, is a refundable tax credit for businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. The credit is designed to encourage employers to keep employees on their payroll, even if their business is fully or partially suspended due to the pandemic.

The ERC is a 50 percent refundable payroll tax credit for eligible employers on up to $10,000 of qualified wages paid to employees between March 12, 2020, and December 31, 2020. The program was extended through June 30, 2021, with a 70 percent refundable payroll tax credit for eligible employers on up to $10,000 of qualified wages paid to employees per quarter.

To qualify for the ERC, a business must meet one of two requirements:

  • The business was fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19, or
  • The business experienced a significant decline in gross receipts, which is defined as a decline of more than 50 percent in gross receipts for a calendar quarter compared to the same quarter in the previous year.

The ERC is available to eligible employers, including tax-exempt organizations, regardless of size. However, the amount of the credit depends on the number of employees the employer had in 2019.

For employers with an average of 500 or fewer full-time employees in 2019, the credit applies to all wages paid to employees during the period the employer qualifies for the credit. For employers with more than 500 full-time employees in 2019, the credit applies only to wages paid to employees who are not providing services due to the suspension of the employer’s operations or a significant decline in gross receipts.

It is important to note that employers cannot claim the ERC for wages paid with funds from a Paycheck Protection Program (PPP) loan that has been forgiven or for wages used to claim the Families First Coronavirus Response Act (FFCRA) paid leave credit.

In conclusion, the ERC is a valuable tool for eldercare facilities to retain their employees during the COVID-19 pandemic. By understanding the eligibility requirements and the credit amount, eligible employers can take advantage of this refundable tax credit to help keep their employees on the payroll.

Eligibility Criteria for Elder Care Facilities

Elder care facilities may be eligible for the Employee Retention Credit (ERC) if they meet certain criteria. The ERC is a refundable tax credit that is available to eligible employers who have experienced a significant decline in gross receipts or whose business operations have been fully or partially suspended due to COVID-19.

To be an eligible employer for the ERC, the facility must have experienced either:

  • A significant decline in gross receipts: This means that the facility’s gross receipts for a calendar quarter in 2020 were less than 50% of its gross receipts for the same calendar quarter in 2019. For 2021, the threshold is reduced to 20%.
  • Full or partial suspension of business operations: This means that the facility’s business operations were fully or partially suspended by a government order due to COVID-19, and the operations have not yet resumed to a comparable level.

If the elder care facility meets either of these criteria, it may be eligible for the ERC. However, there are some limitations on the credit. For example, the credit cannot exceed the employer’s share of Social Security tax for the calendar quarter, and it cannot be claimed for the same wages that were used to claim other COVID-19-related tax credits.

It is important for elder care facilities to carefully evaluate their eligibility for the ERC and to work with their tax advisors to ensure that they are claiming the credit correctly. In addition, the IRS has provided guidance on the ERC that may be helpful for facilities that are considering claiming the credit.

Overall, the ERC can provide significant financial relief for eligible elder care facilities. By working with their tax advisors and carefully evaluating their eligibility, these facilities can take advantage of this valuable tax credit and support their business operations during these challenging times.

Impact of COVID-19 pandemic

The Covid-19 pandemic has had an immense impact on eldercare facilities across the United States. Government orders to suspend operations have forced many facilities to shut down temporarily, leading to significant financial losses. The Employee Retention Tax Credit (ERTC) was introduced in response to the pandemic to help eligible employers keep their employees on payroll.

The ERTC provides a refundable tax credit to eligible employers that have been adversely affected by the pandemic. Eldercare facilities that have experienced a significant decline in gross receipts or have been subject to a government order to suspend operations are eligible to claim the credit. The credit is equal to 50% of qualified wages paid to each employee, up to a maximum of $10,000 per employee.

The ERTC has provided much-needed relief to elder care facilities struggling to keep their doors open during the pandemic. The credit has helped many facilities retain their employees and avoid layoffs, which has been crucial in ensuring that residents continue to receive the care they need.

In addition to the financial support provided by the ERTC, the government has also introduced several other measures to help eldercare facilities during the pandemic. These measures include increased funding for personal protective equipment (PPE) and testing, as well as guidelines for preventing the spread of Covid-19 in long-term care facilities.

Despite these measures, the pandemic continues to pose significant challenges for eldercare facilities. Many facilities are still struggling to cope with the financial and operational impacts of the pandemic, and the future remains uncertain. However, the ERTC has been a valuable tool in helping elder care facilities weather the storm, and it will continue to play an important role in supporting the industry in the months and years to come.

Financial Implications and Gross Receipts

Eldercare facilities may be eligible for the Employee Retention Credit (ERC) provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. To determine eligibility for ERC, elder care facilities need to calculate their gross receipts.

The Department of the Treasury and the Internal Revenue Service (IRS) issued Revenue Procedure 2021-33, which provides helpful guidance regarding the calculation of gross receipts for purposes of determining an employer’s eligibility for ERC. The guidance includes a safe harbor allowing employers to exclude certain items from their gross receipts solely for determining eligibility for ERC.

Eldercare facilities can exclude the following items from their gross receipts calculation:

  • Paycheck Protection Program (PPP) loan forgiveness
  • Shuttered Venue Operators Grants
  • Restaurant Revitalization Grants
  • COVID-19-related disaster relief grants

If an elder care facility has a significant decline in gross receipts, they may be eligible for ERC. A significant decline is defined as a 50% decline in gross receipts for a calendar quarter compared to the same quarter in the prior year.

Eldercare facilities that receive financial assistance from the Provider Relief Fund (PRF) need to be aware of the impact on their gross receipts calculation. PRF payments are not included in gross receipts for ERC purposes. However, expenses paid with PRF payments cannot be used to claim the ERC.

It is important for elder care facilities to carefully review their financial records and consult with a tax professional to determine their eligibility for ERC.

Understanding the CARES Act and the American Rescue Plan Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted on March 27, 2020, to provide economic relief to businesses affected by the COVID-19 pandemic. One of the provisions of the CARES Act is the Employee Retention Credit (ERC), which is designed to encourage eligible employers to keep employees on their payroll despite experiencing economic hardship related to COVID-19. The ERC is a refundable tax credit that can be claimed on quarterly employment tax returns, equal to 50% of qualified wages paid to an employee between March 13, 2020, and December 31, 2020.

The American Rescue Plan Act (ARPA), signed into law on March 11, 2021, extended the ERC through December 31, 2021. Under ARPA, eligible employers can claim the ERC for qualified wages paid between July 1, 2021, and December 31, 2021. The amount of the credit has also increased from 50% to 70% of qualified wages paid during this period.

The ERC is available to eligible employers, including those operating in the elder care facility industry. To be eligible, the employer must have experienced a significant decline in gross receipts or been subject to a full or partial suspension of operations due to a government order related to COVID-19.

Eligible employers can claim the ERC on their quarterly employment tax returns, using Form 941. They can also reduce their payroll tax deposits by the anticipated amount of the credit. If the anticipated credit exceeds the payroll tax deposits, the employer can request an advance payment of the credit from the IRS using Form 7200.

In conclusion, the CARES Act and the American Rescue Plan Act provide eligible employers with the opportunity to claim the Employee Retention Credit, which can be a significant help in retaining employees during the COVID-19 pandemic. Eldercare facilities can also benefit from this credit if they meet the eligibility requirements.

Employee Retention Credit Claim Process

The Employee Retention Credit (ERC) is a refundable tax credit for eligible employers who retained their employees during the COVID-19 pandemic. Eldercare facilities are eligible for this credit if they meet the requirements. Here is a brief overview of the ERC claim process.

ERC Claim

To claim the ERC, eligible employers need to file Form 941, Employer’s Quarterly Federal Tax Return. The credit is claimed on Form 941 for the calendar quarter in which the qualified wages were paid. Qualified wages are wages paid between March 13, 2020, and December 31, 2021.

Withdraw an ERC Claim

If an employer needs to withdraw an ERC claim, they must file an adjusted return. An adjusted return is a corrected Form 941 for the calendar quarter in which the original Form 941 was filed. The adjusted return must be filed by the deadline for the next quarterly return.

Void

If an employer wants to void an ERC claim, they must file a written statement with the IRS. The statement must include the employer’s name, address, and employer identification number (EIN). It must also include the calendar quarter for which the claim was made and the reason for voiding the claim.

Adjusted Return

If an employer needs to adjust their ERC claim, they must file an adjusted return. An adjusted return is a corrected Form 941 for the calendar quarter in which the original Form 941 was filed. The adjusted return must be filed by the deadline for the next quarterly return.

Overall, the ERC claim process is straightforward. However, if an employer needs to withdraw, void, or adjust their ERC claim, they must file an adjusted return or a written statement with the IRS.

Payroll and Qualified Wages

To be eligible for the Employee Retention Credit (ERC), long-term care facilities must have had a partial or full suspension of operations due to COVID-19 or have experienced a significant decline in gross receipts. If eligible, the facility can claim a refundable tax credit for up to 70% of qualified wages paid to employees between January 1, 2021, and June 30, 2021.

Qualified wages include payroll costs, such as salaries, wages, and tips, as well as the cost of providing employee benefits, such as health insurance. The maximum amount of qualified wages that can be claimed for each employee is $10,000 per calendar quarter.

The credit is available for both full-time employees and full-time equivalents. Full-time employees are those who work an average of at least 30 hours per week, while full-time equivalents are calculated by dividing the total number of hours worked by part-time employees by 120.

It’s important to note that the ERC cannot be claimed for the same wages used to calculate other COVID-19 tax credits, such as the Paid Sick Leave Credit or the Family Leave Credit. Additionally, wages paid with forgiven Paycheck Protection Program (PPP) loan proceeds are not eligible for the ERC.

Facilities should keep detailed records of all qualified wages paid to employees, as well as any other relevant documentation, to claim the credit accurately. It’s recommended that facilities consult with a tax professional to ensure they are claiming the credit correctly and maximizing their benefits.

Forms and Documentation

Elder care facilities can claim the Employee Retention Tax Credit (ERTC) by filing Form 941, Employer’s Quarterly Federal Tax Return. The credit can be claimed on eligible wages paid between March 13, 2020, and December 31, 2021.

If a facility has already filed Form 941 for the relevant quarters, they can file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, to claim the credit. The form must be filed for each quarter the credit is claimed, and the credit amount must be reported on the appropriate line of the form.

To claim the ERTC in advance, facilities can file Form 7200, Advance Payment of Employer Credits Due to COVID-19. The form can be used to request an advance payment of the credit for the expected amount of eligible wages for the quarter.

Proper documentation and records must be maintained to support the credit claimed. The documentation should include the following information:

  • The number of employees retained
  • The amount and date of eligible wages paid
  • The amount of the credit claimed on each tax return
  • The total amount of the credit claimed

Records should be kept for at least four years after the due date of the tax return on which the credit was claimed or the date the tax was paid, whichever is later.

In addition, facilities must also keep records of the following:

  • The dates and descriptions of the government orders that caused the suspension of operations
  • The dates and descriptions of the significant decline in gross receipts
  • Any other information that may be relevant to support the credit claimed

Overall, it is important for elder care facilities to maintain accurate records and documentation to support the credit claimed and ensure compliance with IRS regulations.

Role of IRS and Tax Professionals

The IRS plays a significant role in administering the Employee Retention Credit (ERC) for elder care facilities. The agency has issued several notices and guidance documents to help employers and tax professionals understand the requirements for claiming the credit.

One such notice is Notice 2021-20, which provides guidance on the ERC for employers who pay qualified wages after March 12, 2020, and before January 1, 2021. The notice includes detailed instructions on how to calculate the credit and how to claim it on Form 941, Employer’s Quarterly Federal Tax Return.

Additionally, the IRS partners with tax professionals to help ensure that the ERC is being claimed correctly. Tax professionals can play a critical role in helping elder care facilities understand the requirements for claiming credit and ensuring that their claims are accurate.

Tax professionals can also help elder care facilities navigate the process of withdrawing or correcting previously filed claims. The IRS has provided guidance on how to do this, and tax professionals can help ensure that the process is completed correctly.

Overall, the role of the IRS and tax professionals in administering the ERC for elder care facilities is crucial. By working together, they can help ensure that the credit is being claimed correctly and that elder care facilities are receiving the financial support they need during these challenging times.

Understanding Penalties and Interest

When claiming the Employee Retention Tax Credit (ERTC), it’s important to understand the potential penalties and interest that may apply. The IRS may assess penalties and interest for underpayment of taxes, failure to file timely tax returns, or failure to pay taxes owed.

Penalties

If an employer claims the ERTC and later discovers that they were not eligible for the credit, they may be subject to penalties. The penalty for claiming an ineligible credit is 20% of the amount of the credit claimed. Employers should take care to ensure that they meet all eligibility requirements before claiming the ERTC.

Employers who fail to file timely tax returns or who fail to pay taxes owed may also be subject to penalties. The penalty for failure to file a tax return is usually 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25%. The penalty for failure to pay taxes owed is usually 0.5% of the unpaid tax for each month or part of a month that the tax is not paid, up to a maximum of 25%.

Interest

If an employer fails to pay taxes owed, interest will accrue on the unpaid balance. The interest rate is determined quarterly and is the federal short-term rate plus 3%. Interest is compounded daily and is calculated from the due date of the tax return until the date the tax is paid in full.

Employers who claim the ERTC and later discover that they were not eligible for the credit may also be subject to interest on the amount of the credit claimed. The interest rate is the federal short-term rate plus 3%. Interest is compounded daily and is calculated from the date the credit was claimed until the date the tax is paid in full.

In summary, employers should take care to ensure that they meet all eligibility requirements before claiming the ERTC. Failure to do so may result in penalties and interest. Employers who are unsure about their eligibility for the credit should consult with a tax professional.

Avoiding Scams and Promoters

Eldercare facilities should be aware of the potential for scams and unscrupulous promoters concerning the Employee Retention Credit (ERC). The IRS has warned that scammers and promoters continue to run aggressive advertising campaigns, direct mail solicitations, and online promotions for the credit.

To avoid falling victim to these scams, elder care facilities should be cautious of any claims that seem too good to be true. They should also be wary of any requests for payment in exchange for assistance with claiming the ERC. The IRS has issued a renewed warning urging people to carefully review the ERC guidelines before trying to claim the credit.

It is important to note that false claims can generate compliance risk for elder care facilities claiming the credit improperly. The IRS has announced a special withdrawal process to help those who filed an ERC claim and are concerned about its accuracy.

Eldercare facilities are advised to seek guidance from reputable tax professionals to ensure that they are eligible for the ERC and that they are claiming it properly. They should also be cautious of any unsolicited offers of assistance with claiming the credit.

In summary, elder care facilities must be vigilant and cautious in their efforts to claim the ERC. They should be aware of the potential for scams and unscrupulous promoters and seek guidance from reputable tax professionals.

Government Assistance Programs

In response to the COVID-19 pandemic, the US government has implemented several assistance programs to help businesses stay afloat during these trying times. Eldercare facilities may be eligible for some of these programs, including the Paycheck Protection Program (PPP) loan, the Restaurant Revitalization Grant, and the Shuttered Venue Operators Grant.

The PPP loan is a forgivable loan designed to help businesses keep their employees on payroll. Eligible businesses can receive up to 2.5 times their average monthly payroll costs, up to a maximum of $10 million. If the funds are used for eligible expenses, such as payroll, rent, and utilities, the loan may be forgiven in full.

The Restaurant Revitalization Grant is a program specifically designed to help restaurants and other food service businesses. Eligible businesses can receive up to $5 million in grant funds, which may be used for eligible expenses such as payroll, rent, and utilities. The grant does not need to be repaid, and there is no requirement for businesses to use the funds for a specific purpose.

The Shuttered Venue Operators Grant is a program designed to help live entertainment venues, such as theaters and music venues. Eligible businesses can receive up to 45% of their gross earned revenue, up to a maximum of $10 million. The grant may be used for eligible expenses such as payroll, rent, and utilities.

It is important for elder care facilities to carefully review the eligibility requirements for each of these programs to determine if they qualify. Additionally, it is important to note that receiving assistance from one program may affect eligibility for other programs. Eldercare facilities may want to consult with a financial advisor or accountant to determine the best course of action for their specific situation.

Audit and Tax Period

Long-term care facilities that claim the Employee Retention Credit (ERC) should be aware that the IRS will be auditing their claims. The IRS is currently auditing many ERC claims, especially those filed by tax-exempt organizations. These audits may impact the tax-exempt status of the organization if the IRS determines that the organization did not meet the eligibility requirements for the credit.

Facilities should keep detailed records of their eligibility for the credit, including any documentation of gross receipts decline, suspension of operations, or significant decline in gross receipts. These records should be kept for at least four years after the tax period in which the credit was claimed.

The tax period for the ERC is based on the calendar quarter. For example, if a facility claims the credit for the first quarter of 2023, the tax period is from January 1, 2023, to March 31, 2023. The deadline for claiming the credit for a particular quarter is the due date for the employer’s quarterly employment tax return, including extensions.

If a facility claims the credit on its employment tax return but later determines that it was not eligible for the credit, it must file an amended return to correct the error. The amended return must be filed within three years of the due date of the original return or within two years of the date the tax was paid, whichever is later.

Facilities should also be aware that if they claim the ERC, they must reduce their deduction for wages by the amount of the credit for that same tax period. This means that they may need to amend their income tax return to reflect the reduced deduction.

In summary, long-term care facilities should keep detailed records of their eligibility for the ERC, be aware of the tax period for the credit, and be prepared for potential audits by the IRS.

Refunds and Adjusted Employment Tax Return

Eldercare facilities that have claimed the Employee Retention Credit (ERC) may need to withdraw their claims due to various reasons. The IRS provides a procedure for taxpayers to withdraw their ERC claim if they have filed an adjusted employment tax return (Forms 941-X, 943-X, 944-X, CT-1X) to claim the credit and would like to withdraw their entire claim.

If an elder care facility has filed adjusted returns for more than one tax period, they must follow the steps for each tax period they are requesting a withdrawal. The taxpayer must complete a written statement that includes the following information:

  • The taxpayer’s name and address
  • The taxpayer identification number (TIN)
  • The tax period for which the claim is being withdrawn
  • A statement that the taxpayer wants to withdraw the entire ERC claim for the tax period
  • The reason for the withdrawal
  • The signature of an authorized person

The written statement must be sent to the IRS office where the original claim was filed. The taxpayer must also include a copy of the original claim and any supporting documents.

If the taxpayer has received a refund check for the adjusted return that includes the ERC claim, they must return the refund check to the IRS with the written statement. The IRS will not process the adjusted return and will not issue a refund if the taxpayer has already received a refund check.

Elder care facilities that have made an ERC claim on an adjusted employment tax return and made no other adjustments may qualify for an automatic withdrawal. The IRS will automatically withdraw the ERC claim if the following conditions are met:

  • The taxpayer made the claim on an adjusted employment tax return (Forms 941-X, 943-X, 944-X, CT-1X)
  • The taxpayer filed the adjusted return only to claim the ERC and made no other adjustments

In this case, the taxpayer does not need to complete a written statement or return the refund check to the IRS. The IRS will not process the adjusted return and will not issue a refund if the taxpayer has already received a refund check.

It is important for elder care facilities to follow the correct procedure to withdraw their ERC claim if they no longer qualify for the credit. Failure to do so may result in penalties and interest.

Health Insurance and Other Benefits

Long-term care facilities may qualify for the Employee Retention Credit (ERC) for health insurance expenses and other benefits provided to their employees. The ERC is a refundable tax credit that provides up to a potential $26,000 credit per employee to eligible employers who paid qualified wages to their employees after March 12, 2020, and before January 1, 2022.

To be eligible for the ERC, long-term care facilities must meet certain criteria, including the partial or full suspension of their operations due to COVID-19 or a significant decline in gross receipts. If a facility is considered a “small employer” in 2020 or 2021, it may be eligible for significantly higher ERC benefits, including a refundable credit on wages paid and health insurance for all employees during the partial suspension period.

Employers may apply the ERC to health insurance expenses that are allocated to wages on a pro-rata basis among covered employees, such as the average premium for all employees covered by a plan, and over periods of coverage relative to the periods to which such wages relate. This means that employers can claim the ERC for health insurance premiums paid on behalf of their employees, as well as other benefits such as retirement plan contributions, group term life insurance, and certain educational assistance programs.

It is important to note that the ERC cannot be claimed for the same wages or health insurance expenses that were used to claim other tax credits, including the Paid Sick Leave Credit and the Family Leave Credit. Additionally, the ERC cannot be claimed for wages paid to relatives of the employer or for wages paid to employees who are also owners or partners of the business.

Overall, the ERC can provide a lifeline to long-term care facilities struggling to retain their employees during the COVID-19 pandemic. By providing a tax credit for health insurance expenses and other benefits, the ERC can help facilities attract and retain skilled workers, ensuring that they can continue to provide high-quality care to their residents.

Tax-Exempt Organizations and ERTC

Tax-exempt organizations are eligible for the Employee Retention Tax Credit (ERTC) if they meet certain criteria. The ERTC is a refundable tax credit that is available to businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. The requirements for tax-exempt organizations are different from those for businesses.

To qualify for the ERTC, a tax-exempt organization must have experienced either a full or partial suspension of operations during any calendar quarter in 2020 due to governmental orders concerning COVID-19, or it must have experienced a significant decline in gross receipts during certain eligibility periods in 2020 and 2021. The tax-exempt organization must have also paid qualified wages to its employees during the eligibility period.

The amount of the ERTC for tax-exempt organizations is equal to 70% of the qualified wages paid to employees, up to a maximum of $10,000 per employee per calendar quarter. The credit is available for wages paid from March 13, 2020, through December 31, 2021.

It is important to note that tax-exempt organizations that receive a Paycheck Protection Program (PPP) loan are not eligible for the ERTC. However, if a tax-exempt organization did not receive a PPP loan, it may still be eligible for the ERTC.

Tax-exempt organizations must also be aware of the recordkeeping requirements for the ERTC. They must keep records that support the eligibility of the organization for the credit, the amount of the credit claimed, and the number and names of employees receiving the credit.

In summary, tax-exempt organizations that meet the eligibility requirements can claim the ERTC for qualified wages paid to employees during certain eligibility periods in 2020 and 2021. The credit is equal to 70% of the qualified wages paid, up to a maximum of $10,000 per employee per calendar quarter. Tax-exempt organizations must keep accurate records to support their claim for the credit.

Recovery Startup Business

Eldercare facilities that are considered a recovery startup business may be eligible for the employee retention tax credit (ERTC). A recovery startup business is defined as a business that began operating after February 15, 2020, and has average annual gross receipts of $1,000,000 or less for the three-tax-year period ending with the tax year that precedes the calendar quarter for which the ERTC is determined.

To qualify as a recovery startup business, the elder care facility must also meet certain criteria. For the third and fourth quarters of 2021, the elder care facility must have experienced a full or partial suspension of operations due to a government order related to COVID-19 or have experienced a significant decline in gross receipts. The decline in gross receipts must be greater than 20% when compared to the same calendar quarter in 2019.

If the elder care facility meets the criteria to be considered a recovery startup business, it may be eligible to claim up to $50,000 per quarter in ERTC. The credit is calculated as 70% of qualified wages paid to employees, up to a maximum of $10,000 per employee per quarter.

It’s important to note that if the elder care facility received a Paycheck Protection Program (PPP) loan, it may still be eligible for the ERTC, but the wages used to calculate the ERTC cannot be the same wages used to calculate PPP loan forgiveness.

Overall, elder care facilities that are considered a recovery startup business may be able to take advantage of the ERTC to help retain employees during the COVID-19 pandemic.

Small Business and Employee Retention Tax Credit

Small businesses and elder care facilities have been hit hard by the COVID-19 pandemic. To help alleviate some of the financial strain, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) have implemented tax credit programs for small businesses and tax-exempt organizations. One such program is the Employee Retention Credit (ERC).

The ERC is a refundable tax credit that helps businesses keep their employees on payroll during the pandemic. The credit is equal to 50% of the qualified wages paid to employees, up to a maximum of $10,000 per employee for all calendar quarters. This means that the maximum credit per employee is $5,000.

To qualify for the ERC, a business must have experienced a significant decline in gross receipts or been subject to a full or partial suspension of operations due to a government order related to COVID-19. The decline in gross receipts must be at least 20% for 2021, and at least 50% for 2020.

Small businesses with fewer than 500 employees are eligible for the ERC, including tax-exempt organizations. However, businesses that received a Paycheck Protection Program (PPP) loan are not eligible for the ERC. Businesses can claim the credit on their quarterly employment tax returns, and if the credit exceeds the amount of taxes owed, the excess will be refunded to the business.

In addition to the ERC, small businesses and elder care facilities may also be eligible for other tax credit programs, such as the Paid Leave Tax Credit and the Credits for Sick and Family Leave. Businesses need to review all available tax credit programs to determine which ones they are eligible for and can benefit from.

Overall, the Employee Retention Credit is a valuable tool for small businesses and elder care facilities to help keep their employees on payroll during the pandemic. By taking advantage of this tax credit program, businesses can reduce their financial burden and continue to provide essential services to their communities.

Revenue Procedure 2021-33

Revenue Procedure 2021-33 provides a safe harbor for employers to exclude certain amounts from gross receipts solely for determining eligibility for the Employee Retention Credit (ERC). The ERC is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after June 30, 2021, and before January 1, 2022.

The safe harbor permits eligible employers to exclude from gross receipts the following amounts:

  • The amount of the ERC claimed on the employer’s federal employment tax return
  • The amount of the ERC claimed on a Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund
  • Any advance payments of the ERC received from the IRS

Eligible employers that use this safe harbor will not be required to perform gross receipts calculations or obtain audited financial statements to determine eligibility for the ERC.

It is important to note that the modifications made by the American Rescue Plan Act or the Consolidated Appropriations Act, 2021, to the ERC, are not relevant to this revenue procedure, except to the extent specifically discussed herein. Nonetheless, references to these modifications are included in the revenue procedure for informational purposes.

Overall, Revenue Procedure 2021-33 provides eligible employers with a safe harbor to exclude certain amounts from gross receipts solely for determining eligibility for the ERC. Employers should consult with their tax advisors to determine if they qualify for the ERC and how to properly claim it on their federal employment tax return.

Maximizing the Employee Retention Tax Credit

Eldercare facilities can maximize the Employee Retention Tax Credit (ERTC) to help offset their payroll costs and retain their employees. The ERTC is a refundable tax credit for businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. Eligible employers can claim a maximum amount of up to $5,000 per paid employee for wages paid between September 1, 2021, and December 31, 2023.

To maximize the ERTC, elder care facilities should consider the following:

Eligibility

First, elder care facilities should determine if they are eligible for the ERTC. Eligible employers are those who have had to shut down or partially suspend their operations due to government orders or have experienced a significant decline in gross receipts. Additionally, eligible employers must have had an average of 500 or fewer full-time employees in 2019.

Wages

Eldercare facilities can maximize the ERTC by paying wages to their employees during the eligible period. The maximum amount of wages that can be used to calculate the credit is $10,000 per employee per quarter. This means that the maximum credit per employee is $5,000 for wages paid between September 1, 2021, and December 31, 2023.

Documentation

To claim the ERTC, elder care facilities must keep accurate records of their wages and the number of employees they retained during the eligible period. They should also keep records of any government orders or significant declines in gross receipts that affected their operations.

ERTCMaximizer

Eldercare facilities can also consider using ERTCMaximizer to help streamline their eligibility assessment, calculation, and claim process to maximize their tax savings. ERTCMaximizer is a tool that helps businesses optimize their ERTC benefits by providing guidance on eligibility, calculating credit, and submitting claims to the IRS.

By maximizing the ERTC, elder care facilities can help offset their payroll costs and retain their employees during the COVID-19 pandemic.

Frequently Asked Questions

What is the Employee Retention Credit for long-term care facilities?

The Employee Retention Credit (ERC) is a refundable tax credit available to eligible employers, including long-term care facilities, who retain employees during the COVID-19 pandemic. The ERC is intended to provide financial assistance to employers who have been impacted by the pandemic and to encourage them to keep employees on their payroll.

What are the eligibility requirements for the Employee Retention Credit in elder care facilities?

To be eligible for the ERC, elder care facilities must have experienced a significant decline in gross receipts or have been subject to a full or partial suspension of operations due to government orders related to COVID-19. Additionally, the facility must not have received a Paycheck Protection Program loan.

How does the Employee Retention Credit for nursing homes work?

Elder care facilities, including nursing homes, can claim the ERC for wages paid to employees during the period of March 13, 2020, through December 31, 2021. The credit can be claimed on up to $10,000 in qualified wages per employee per quarter. The credit is calculated as 50% of qualified wages, up to a maximum of $5,000 per employee in 2020 and $7,000 per employee per quarter for the first three quarters of 2021.

Can elder care facilities claim the Employee Retention Credit for healthcare workers?

Yes, elder care facilities can claim the ERC for wages paid to all employees, including healthcare workers. However, the facility must meet the eligibility requirements outlined by the IRS.

What is the maximum amount that elder care facilities can claim for the Employee Retention Credit?

Eldercare facilities can claim up to $33,000 per employee for the entire period of March 13, 2020, through December 31, 2021. The credit is calculated as 50% of qualified wages, up to a maximum of $5,000 per employee in 2020 and $7,000 per employee per quarter for the first three quarters of 2021.

What is the process for claiming the Employee Retention Credit for elder care facilities?

Elder care facilities can claim the ERC by reporting the credit on their employment tax returns, such as Form 941, and Employer’s Quarterly Federal Tax Return. Alternatively, the facility can file an amended employment tax return to claim the credit. The IRS has provided detailed guidance on how to claim the ERC on its website.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top