Medical and Dental Providers could Claim the Employee Retention Credit
COVID-19 negatively impacted many businesses, medical practices, and dental providers, who lost substantial amounts of revenue due to mandatory shutdowns and sanitation requirements. The U.S. Government enacted legislation to help business owners stay open during the pandemic, such as the Paycheck Protection Program
The CARES Act paved the way for Employee Retention Credit incentives to help businesses, such as medical and dental providers, recoup some of their losses resulting from COVID-19 shutdowns.
The Employee Retention Credit
Under the CARES Act, the ERC is a payroll tax credit in 2020 of up to $5,000 per employee, based on $10,000 of eligible wages paid within the calendar year. The eligible wages include the employer’s share of qualified health plan expenses paid for employees allocable to wages associated with that period.
The ERC is available for eligible wages paid after March 12, 2020 and before January 1, 2021. The Consolidated Appropriations Act, enacted December 27, 2020, extended the ERC to Q1 and Q2 of 2021. The American Rescue Plan Act enacted on March 11, 2021, further extended the ERC until December 31, 2021 and increased the credit amount to up to $7,000 per employee per calendar quarter.
How Can a Medical or Dental Provider Qualify for the ERC?
Employers, medical practitioners, and dental providers must meet one of these eligibility requirements:
- The employer’s operations were completely or partially suspended due to COVID 19-related governmental orders, or
- The employer incurred a more than 50% decline in gross receipts during a 2020 Calendar quarter compared to the same quarter in 2019.
However, many state and local jurisdictions restricted elective procedures, such as surgeries, which could meet the threshold of a government shutdown. Capacity restrictions may have reduced patient visits for medical and dental practices. If you were required to close your office early to meet sanitation requirements periodically, this might qualify as a partial shutdown that impacted revenues.
Many providers did not meet the 50% reduction in gross receipts threshold in any quarter of 2020. In 2021, the percentage threshold was changed to a 20% reduction in gross receipts in any quarter of 2021, which might warrant another look by most providers.
A certified tax professional can review your business situation and advise whether your medical or dental practice is eligible for ERC benefits.
Our Practice operates in several locations. How does that affect the ERC?
The ERC does not change based on the number of locations a business has. However, the number of employees your business has in total might change the ERC you receive. A small business employer is any business that has less than 100 full-time employees, and all employee wages can be considered for eligibility. For the 2020 ERC, a large employer is any business that averaged more than 100 full-time employees in 2019. For the 2021 ERC, a large employer is any business that employed more than 500 full-time employees in 2019. Large employers can only receive a credit for wages paid to employees who did not provide services.
Calculating employee retention credits and determining eligible wages can be challenging for business owners. That’s why you should consult our accredited tax professionals.
How Can We Determine the Amount of the ERC?
For 2020, Eligible employers may claim a 50% tax credit of up to $5,000 per employee for the year for qualified wages of $10,000. For 2021, the credit was changed to a 70% credit, or a maximum of $7,000 per quarter per employee for qualified wages of $10,000 per quarter.
As an example, suppose that XYZ medical practice employs 45 employees and meets the eligibility requirements. At the maximum tax credit of $5,000 per employee per year, the employer would receive $225,000 for 2020. At the maximum tax credit of $7,000 per employee per quarter, the employer would receive $1,260,000 for 2021.
While this is a simplified calculation, any medical or dental practice owner can see that the ERC can provide a significant value. Our tax professionals have helped many businesses claim the benefits of the ERC. Contact us to do the same for your practice.
Are we excluded from receiving the ERC if we already received a PPP?
The Consolidated Appropriations Act allowed an employer to be eligible for both PPP loan forgiveness and the ERC. However, you need to make sure that the wages you use are not double-counted because you cannot use the same wages for eligibility calculations for both programs.
As trusted tax experts, we can analyze your employee wages to ensure no overlap between PPP and ERC.
Why Should You Use ERTC Filing?
- We provide straightforward answers that a business owner can understand.
- We will walk you through the ERC process and make it easy.
- We provide follow-up support for questions and concerns.
- We have assisted businesses all over the country receive Employee Retention Credits of $131,730,900.
There is a good chance that your medical or dental practice will be eligible to receive the ERC due to the government-ordered shutdown in 2020 and the change in the reduction of gross receipts threshold to 20% in 2021. Even if your 2020 taxes have been filed, you can still file an amended return and claim the Employee Retention Credit. The effect would be to offset your FICA and income tax withheld or a reduction in taxes owed. Don’t leave money on the table!
Let ERTCFiling.com show you how your business can benefit from the ERC.