Is Employee Retention Credit Taxable? 

 November 4, 2023

By  Jace W Campbell, CPA

Is Employee Retention Credit Taxable

The Employee Retention Tax Credit (ERTC) is a refundable tax credit designed for businesses that continue to employ their workers during times of financial difficulty… This incentive came into being in recognition of the hardships faced by many during unexpected situations like the COVID-19 pandemic… However, one question that arises is: Is employee retention credit taxable?

In response to this, it’s important to note that the IRS considers the ERTC as non-taxable income… Thus, businesses do not have to pay taxes on this credit.

Also read: How Do I Check the Status of My ERC Refund?

Diving Deeper into ERTC

It’s worth noting that despite being non-taxable, the ERTC has specific implications for businesses’ tax returns… For instance, an organization cannot deduct wages equal to the amount of credit received from its taxable income. This is an essential aspect for businesses to understand while calculating their overall tax liability.

Additionally, businesses should be aware of how they can leverage this credit and how it impacts their financial health… Utilizing our “Ultimate Guide to ERTC”, we’ll address two other questions that are common for readers researching ERTC.

How Confident Are You In Your ERTC Eligibility?

Watch Our Video Explaining the Fraud We’ve Seen From National ERC Promoters

Benefits of ERTC

Primarily, ERTC offers financial relief to companies striving to retain their employees during tough economic conditions. It provides a substantial amount of capital back into these companies’ hands that can be used for various operational expenses… Furthermore, as we established earlier, this credit is non-taxable which adds additional financial benefits.

However, there are more layers to these benefits… In particular circumstances where an organization has also received a Paycheck Protection Program (PPP) loan, understanding how these two programs intersect can be critical.

Also read: Employee Retention Credit for Workers

Interaction Between PPP Loan and ERTC

Prior to December 2020, businesses were not allowed to claim both a PPP loan and the ERTC… However, this restriction was lifted with the passing of the Consolidated Appropriations Act. This change allows businesses to take advantage of both financial aid programs, amplifying their economic relief during challenging times.

Yet, there’s a crucial detail here… While a business can now leverage both a PPP loan and ERTC, it cannot claim the ERTC on wages that were paid with the forgiven portion of a PPP loan.

This subtle distinction can be complex and challenging to understand for many businesses… And this is where professional guidance from experts such as JWC ERTC Advisory CPA becomes invaluable.

Why Choose JWC ERTC Advisory CPA

As we’ve discussed, understanding the intricacies of ERTC, including its interplay with other financial aid programs like PPP, can be daunting. Many businesses struggle to navigate these complexities and maximize their benefits without expert advice…

And this is where JWC ERTC Advisory CPA shines. With an extensive understanding of ERTC and associated tax laws, our team helps clients not only comprehend these complexities but also devise strategies to optimally benefit from them.

But why choose us? It’s simple… In recent times, there has been an increased crackdown by IRS on ERC promoters in an attempt to curb ERTC fraud. This situation further escalates the fear and uncertainty among taxpayers about availing these credits.

With JWC ERTC Advisory by your side, you have access to professional expertise that strictly adheres to IRS regulations and ensures transparent dealings… We provide an independent eligibility review for taxpayers who have previously filed for ERTC but are uncertain about their eligibility for the credits.

In essence, partnering with JWC ERTC Advisory means reducing fear and uncertainty while maximizing potential gains… It’s time to make your journey through Employee Retention Tax Credit as smooth as possible!

Jace W Campbell, CPA

Jace founded JWC ERTC Advisory CPA in March 2021 as the nation's first and only public accounting firm focused solely on ERC . . . and nothing else. He has personally signed over 9,000 ERTC claims and is proud to be executing these claims conservatively, and how intended by Congress.

He has a passion for educating clients so they can make the best decision for themselves.  If you read articles and watch videos that Jace produced in 2021, his approach is the same now as it was then.

While other firms pivot their messaging to comply with new IRS guidance, Jace continues preaching the same conservative principles that have helped clients recover hundreds of millions . . . while sleeping easy at night.

related posts:

Can You Claim Employee Retention Credit in 2023?

Can You Claim the Employee Retention Credit in 2022?

Employee Retention Credit Scams: What You Need to Know

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