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Archive for Employment Tax Credits

Common Errors To Avoid When Claiming Employer Tax Credits

Common Errors To Avoid When Claiming Employer Tax Credits

Employers who are filing Form 941, Employer’s Quarterly Federal Tax Return and claiming an employer tax credit should read the instructions carefully and take their time when completing the form to avoid mistakes.

Using a reputable tax preparer including certified public accountants, enrolled agents or other knowledgeable tax professionals can also help avoid errors. Mistakes can result in a processing delay or a balance due notice, which could mean a delay or require filing an amended return.

Here are some common mistakes to avoid when completing Form 941:

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Employers Beware: IRS Guidance On Recapture Of Excess FFCRA Employment Tax Credits

Employers Beware: IRS Guidance On Recapture of Excess FFCRA Employment Tax Credits

The IRS released rules providing for the recapture of refundable employment tax credits under CARES and FFCRA. Form 7200 now allows employees to claim advance payments of any amounts remaining. However, the IRS guidance makes clear that employers are required to reconcile any advance payments claimed on Form 7200 with total credits claimed and total taxes due on their employment tax returns. For more information on the credits, visit Tax Facts Online.

What penalty relief is provided for employers who withhold payroll tax deposits in light of the employee retention tax credit and the paid leave credit?

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IRS Provides Guidance On Recapturing Excess Employment Tax Credits

IRS Provides Guidance On Recapturing Excess Employment Tax Credits

The Internal Revenue Service issued a temporary regulation and a proposed regulation to reconcile advance payments of refundable employment tax credits and recapture the benefit of these credits when necessary.

The regulations authorize the assessment of erroneous refunds of the credits paid under both the Families First Coronavirus Response Act (Families First Act) and Coronavirus Aid, Relief and Economic Security Act (CARES Act).

The Families First Act generally requires employers with fewer than 500 employees to provide paid sick leave for up to 80 hours and paid family leave for up to 10 weeks if the employee is unable to work or telework due to COVID-19 related reasons. Eligible employers are entitled to fully refundable tax credits to cover the cost of the leave required to be paid.
The CARES Act provides an additional credit for employers experiencing economic hardship due to COVID-19. Eligible employers who pay qualified wages to their employees are entitled to an employee retention credit.
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