Calculating and claiming the Employee Retention Credit (ERC) in New York can be a valuable way for businesses to receive financial assistance during the COVID-19 pandemic. Here’s a step-by-step guide on how to calculate and claim the ERC in New York:
- Determine eligibility: To be eligible for the ERC, a business must meet certain criteria. The business must have been fully or partially suspended by a governmental order due to COVID-19, or have experienced a significant decline in gross receipts. If your business meets either of these criteria, you may be eligible for the ERC.
- Calculate the credit: To calculate the credit, you will need to determine the eligible wages paid to your employees during the period of either full or partial suspension or significant decline in gross receipts. Eligible wages are wages paid to an employee who was not providing services due to the COVID-19 related circumstances described above. You can also include qualified health plan expenses, but only if they are allocable to the eligible wages. The credit is 50% of the eligible wages paid to each employee, up to a maximum credit of $5,000 per employee for all calendar quarters.
- Claim the credit: To claim the ERC, you will need to complete Form 7200, Advance Payment of Employer Credits Due to COVID-19. If you have already filed your employment tax return for the quarter in which you paid the eligible wages, you can claim the credit on an amended return using Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.
- Use the credit: The ERC is a refundable credit, which means it can be claimed in addition to any employment tax deposits made during the quarter. If the credit exceeds your employment tax liability for the quarter, the excess will be refunded to you.
It’s important to note that the ERC is only available for wages paid in 2020 and 2021. If you think your business may be eligible for the ERC, it’s a good idea to calculate and claim the credit as soon as possible to ensure you receive the maximum benefit.
In summary, calculating and claiming the Employee Retention Credit in New York can be a helpful way for businesses to receive financial assistance during the COVID-19 pandemic. By determining eligibility, calculating the credit, claiming the credit, and using the credit, businesses can take advantage of this valuable opportunity to offset the impact of the pandemic on their operations.
