If you are a farmer, you can enjoy some extra cash in the form of the Employee Retention Credit. This program is offered to you by the federal government and it helps to keep you and your employees motivated. You can get more information about the program in this article.
If you are a farmer with a small business that has between 5 and 500 employees, chances are you qualify for the employee retention credit offered by the federal government. To qualify for the funds, your business must have either
1.Lost 20% of gross receipts or more between 2020 and 2021
2. Had to fully or partially shut down any time between 2020 and 2021
In 2023, you can now get the ERC credit even if you got the PPP loan. To find out exactly how much money you can get from this tax credit program, fill out the short form below:
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Paycheck Protection Program (PPP)
The Paycheck Protection Program (PPP) provides forgivable loans to agricultural producers to cover payroll expenses. The program is administered by the Small Business Administration (SBA). To qualify for the program, a business must be classified as a sole proprietor or as self-employed.
PPP loans are issued by SBA-approved lenders. To qualify for a PPP loan, businesses must use at least 60 percent of the funds to cover payroll expenses. If a business does not spend at least 60% of its loan on payroll, it will not be eligible for loan forgiveness.
PPP loans are distributed to small businesses on a first-come, first-served basis. Funds are repaid over a two-year period. An additional eight-week grace period is available after the disbursement date, during which a business can be forgiven.
The PPP loan program is designed to support resilience during times of economic uncertainty. It also helps provide liquidity and working capital to small businesses. In addition, the PPP is forgivable if a business uses the funds as intended. However, it is important to keep in mind that this program is not available to farmers who hire independent contractors.
Farmers can apply for a PPP loan by filling out an application. Businesses must use the funds for eligible expenses within 8 to 24 weeks after the funds are issued.
Farms must have a positive net income in order to be eligible for the PPP. There are also limitations on what expenses are considered. For example, qualified sick leave credit is not covered by the PPP. Similarly, a loan cannot be used to pay employees in other countries.
Some farmers who have a limited number of employees may qualify for a smaller PPP loan. Other businesses with self-employed earnings may have trouble calculating their payroll costs. Nevertheless, there are many self-employed individuals who can apply for a PPP loan.
According to the SBA, the maximum loan amount is $20,833 per year. Farmers may also submit a single application if they own multiple businesses.
The deadline for PPP loan applications is March 31. Lenders are waiting for additional guidance regarding loan amounts and loan forgiveness.
The Employee Retention Credit is a tax credit designed to reward business owners who are committed to keeping their employees on the job. Generally, the ERC is available to most businesses and can reduce your payroll taxes by up to $7,000 per employee, provided you meet certain eligibility requirements.
In order to qualify, you must pay qualified wages. A “qualified wage” is a wage that meets certain definitions in the Internal Revenue Code, including being paid during a period when your business is suspended due to a governmental order.
Among the most notable features of the ERC is the fact that the credit is refundable. You can claim this credit, and only this credit, against your employment taxes. However, this does not include any allocable health care costs.
To be eligible for the ERC, you must be an Eligible Employer. An Eligible Employer is defined as any employer that pays qualified wages. This includes both government and private entities.
The ERC is not available to sole proprietors, partners, or other self-employed individuals. It is also not applicable to entities that are not carrying on a trade or business. There are certain exceptions, including tribal governments and state and local governments.
Those interested in learning more about the ERC may want to contact a tax specialist. They will be able to provide details and recommendations regarding your specific situation. Depending on your particular business needs, the Employee Retention Credit can be a major boon to your bottom line.
As with any tax filing, there are pitfalls to avoid. Be sure to get all of your questions answered before filing. Your accountant or tax specialist should be able to tell you whether you are eligible for the credit. Also, if you think you may have missed out on the credit in 2021, file an amended federal tax return.
The most important question is whether you actually qualify. If you do, your new business may qualify for the ERC and other tax breaks in 2021. Once you’ve identified whether you are eligible, you’ll need to gather all of your supporting documentation and upload them to a secure portal.
Eligible overtime hours
If you are a farmer, chances are you have heard of the Farm Workforce Retention Credit (FWRC). This tax credit provides refundable tax credits for farm employers. Previously, these credits could be claimed only if you had 500 employees or more. However, the cap has been increased to 500 full-time equivalent employees. To claim this credit, you will need to submit a claim form to the NYS Department of Agriculture and Markets.
There are a number of perks to being a farm employer, including an attractive tax rate and the opportunity to take part in the New York state ag credit program. In addition to the aforementioned tax credit, the state also offers a number of other business incentives. A list of programs and their benefits can be found on the NYS Department of Agriculture and Markets website.
Besides the aforementioned FWRC, farmers can also reap the benefits of the Paycheck Protection Program (PPP). The program was enacted in 2016 as a response to the coronavirus that swept through New York in 2017. During that year, many businesses had to shut down due to the coronavirus. Others closed on specific days of the week. While not a panacea, the PPPM did help some farmers weather the storm.
Although the aforementioned PPP was designed for farm employers, it was not without its share of controversy. Farmers can still benefit from the aforementioned perks as long as they take the appropriate precautions. Some of these precautions include ensuring that the payroll record systems used are up to par. Additionally, it may be helpful to consult a tax attorney.
As with all programs, there are some downsides. For example, the aforementioned fad may have a short shelf life. Likewise, a farmer with a large employee base may not be eligible for the aforementioned perks for years to come. Also, the aforementioned perks are best enjoyed in conjunction with other programs, such as the NYS Farmer’s Tax Advantages Kit. Lastly, it may be a good idea to hire a trusted tax professional to guide you through the maze of forms and deadlines.
Claiming the credit
Employee Retention Credit (ERC) is a tax credit designed to encourage employers to keep employees on their payroll. The IRS provides guidance on how to claim the credit. Generally, the credit is worth 70 percent of the qualified wages paid to employees during a credit-generating period. It’s available to all eligible employers, including small and large businesses.
Before claiming the credit, employers should consult a tax specialist. They’ll review information on the business, including accounting records. If there were any changes or if the business has decreased, a specialist will determine if the employer is still eligible for the credit.
Employers who want to take advantage of ERC should file an amended Form 941. This form must be filed within three years of the original filing deadline. In addition, they should also file a Form 941X if their business is not operating at a level that meets the requirements of the credit.
ERC can help reduce the amount of employment taxes employers owe, and is available to all qualified employers. However, there are limitations to the program. For example, it’s not available to employers who have taken out a Paycheck Protection Program loan.
Businesses can receive a credit up to $10,000 per employee per quarter. This is based on the wages that were paid in the same quarter in the previous year. An employer may apply the credit to their federal taxes, or they can wait for a refund. There are several factors to consider when calculating the amount of the credit.
In order to qualify for the credit, a business must have a gross receipts decrease of more than 20% in 2021. This means that the second quarter of 2020 will need to have a gross receipts drop of at least 50% from the first quarter of 2019.
Businesses that are not active trades, such as passive investment vehicles, cannot claim the credit. Also, the total federal gross income must exceed $30,000 for the tax year.
To determine whether an employer is eligible for ERC, the IRS offers a Frequently Asked Questions page. If an employer needs more information, they can also contact a farm accounting specialist.