By James Santiago
As part of an agreement to avert a partial governmental shutdown, the Senate Finance Committee and the House Ways and Means Committee announced a bipartisan, tax framework that will be sunsetting several pandemic tax credits at the end of the month which originally had expiration dates of another year. Credit initiatives like the Employer Retention Tax Credit, “ERTC” which provided critical cash flow to struggling small businesses will now end on 1/31/24. Although the bill has not been signed into law as of today, the bill has bipartisan support and leaves very little time to spare to process any credits once signed into law.
It is our recommendation for any small business who was impacted by the COVID-19 pandemic and issued W2’s to their employees to open a dialogue with one of our CPA members. We can determine if your business qualifies for the ERTC and can also have a conversation about other credit programs which you may be eligible for. There is still time to file for the ERTC, but timing is of the essence, and we would need a response by the organization no later than 1/22/24 to have a chance to meet the statute of limitations deadline.
Small Business Tax Credits: For self-employed individuals (Schedule C or 1065 K-1s) who had positive net income and paid self-employment taxes there is still time to file for the small business tax credit. The small business tax credit is a pandemic related credit similar, but in addition to PPP and the Employer Retention Tax Credit “ERC” which provides small business owners compensation for sick and family leave time to business owners who would not be eligible to claim ERC for themselves. If you were self-employed, had positive net income and were unable to work due to COVID-19 sickness (or other qualifying reasons), you have until 04/15/2024 for tax year 2020 and 04/15/2025 for tax year 2021 to file an amended return for these credits. We would strongly recommend consideration of filing this credit now, before it is taken away like the ERTC by any future congressional bills.
As a firm we are here to support and provide you with the information you need to make the right decision regarding these credits. If you would like to discuss this matter further with one of our subject matter experts, now is the time to call. Thank you and we look forward for the opportunity to service you as a client.