EMPLOYEE RETENTION TAX CREDIT - BUSINESSES THAT QUALIFIED AND APPLIED:
Businesses that applied for the ERTC and were deemed eligible for the tax credit ultimately will have to amend business tax returns for the time period in which the tax credit relates to.
Example: Your business was eligible for the ERTC for Q4 2020, and an amended Form 941-X was sent to the IRS to apply for the credit. Once the money is received for the credit that was applied for, the business will be required to amend their 2020 tax return. The reason being that the business' wages expense was reduced for that year due to receiving money back via the ERTC.
The amended business tax return will generate a new K-1 and therefore personal tax returns will need to be amended too for the years in which the credit relates to.
KEY STEPS IN THE PROCESS
  1. Fill out Initial Questionnaire and Ownership Form with Omega Accounting
  2. Omega Accounting will send a contract for you to sign
  3. Omega Accounting requests information and completes the eligibility analysis and tax credit calculation
  4. Once eligibility is determined and the ERTC is calculated, Omega Accounting will send invoices. 3% of the Omega Accounting fee is due right away, and the other 7% is due upon actually receiving the money for the credit (Omega Accounting charges 10% of the ERTC recovery - this seems to be the standard rate for ERTC calculations)
  5. When the initial 3% fee is paid to Omega Accounting, they will file Form 941-X on your behalf which applies for the ERTC to the IRS
  6. Business receives the money from the IRS (recent news from the IRS has said processing can take up to 9-12 months)
  7. Business must amend their tax return for the years in which the ERTC relates
  8. A new K-1 will be generated and all partners (Or shareholders) of the business must amend their personal tax returns for the years in which the ERTC relates
  • Please note, since business income will be increased (due to the credit reducing wages expense), the partners/shareholders will owe taxes due to the increase in income, and there will be a small amount of interest due
VERHOFF & COMPANY UPDATE
The ERTC is still highly beneficial to many companies as the ERTC refund is often substantially higher than the additional taxes and interest that it will cause. Verhoff and Company will help amend business tax returns and personal tax returns, however, there will be a fee for the time and work that it takes to complete those amended returns.

As always, please contact us at 419-523-5447 with any questions you may have.