Frequently Asked Questions


The Employee Retention Credit is a payroll tax credit for companies that lost revenue due to the Covid-19 pandemic and government restrictions. Here are some of the most common questions about the ERC program in the U.S.

The ERC is available to businesses of any size in the United States that have either been fully or partially suspended due to COVID-19 government orders or suffered a significant decline in gross receipts. The ERC is also available for some non-profit organizations. For more detailed information on eligibility requirements, please refer to the ERC FAQs published by the IRS.

For companies applying for the ERC in the 2020 tax year, there needed to be a 50% reduction in gross receipts compared to the 2019 tax year. For companies applying in the 2021 tax year, there needed to be a 20% reduction in revenues.

No, ERC payments do not need to be paid back as long as the ERC was claimed in accordance with the rules set by the IRS. However, you must take care to ensure that your ERC claims are accurate and valid before making them. Inaccurate ERC claims may be subject to penalties and interest.

The ERC was made available via a refundable payroll tax credit, so ERC payments are generally distributed through the employer’s payroll process. Employers must reduce their federal employment taxes to claim ERC payments, and this will show up on the quarterly and annual payroll tax returns. ERC payments can also be claimed through Form 941, which is submitted on a quarterly basis.

No, ERC funds are not taxable income for employees or employers. ERC payments are considered to be non-taxable wages that are excluded from both the employee’s gross income and wages and the employer’s payroll taxes. ERC payments are also excluded from FICA, Medicare, and Social Security Taxes. Even though the ERC is not taxable income, it is still subject to expense disallowance rules that effectively make it taxable.

No, ERC retention payments cannot be used to provide employees with retroactive salary increases or bonuses. ERC funds must be used in accordance with IRS regulations and may not be used to provide employees with any type of financial benefit other than those specifically outlined by the ERC program.

Yes, if the wages a company paid are qualified under the terms of the ERC program, and if the same qualified employees have health insurance premiums, that will likewise qualify for ERC credit.

Yes, ERC funds are available to both for-profit and non-profit organizations that were shuttered during the Covid-19 pandemic due to government restrictions, and consequently suffered loss of gross receipts. ERC funds may only be used to cover employee payroll costs, including wages and other compensation. ERC payments are not available for any type of rental or capital expenses, such as office rent or the purchase of equipment.

No, ERC payments cannot be used to cover unpaid leave. ERC payments are intended to retain employees on payroll and may only be used to pay wages or other compensation, such as tips or bonuses. ERC funds may not be used to cover any type of employee expense other than those specifically outlined by the ERC program.

R&D Tax Credit FAQ

The R&D tax credit in the United States is a valuable incentive for businesses engaged in research and development activities. While there are many questions regarding R&D tax credits, here are some frequently asked questions:

Generally speaking, any business entity that engages in R&D activities can qualify for R&D Tax Credits. However, the R&D must be conducted in the United States and must comply with IRS regulations.

The R&D must meet certain criteria, such as technological uncertainty and having a process of experimentation. R&D activities that are eligible for R&D Tax Credits include software development, product design and prototyping, process improvements, production advancements, and more.

Yes, the R&D must be conducted in the United States and must comply with IRS regulations. Additionally, R&D Tax Credits are only available to businesses operating in the United States and cannot be applied to R&D activities conducted outside of the US.

Businesses must file Form 6765 with their tax return to claim R&D Tax Credits. It is important to note that the form must be filed within 12 months of the end of the tax year in which R&D activities occurred. Additionally, businesses should consult a tax professional for assistance in completing and filing Form 6765.

R&D Tax Credits can provide businesses with significant tax savings, depending on their R&D activities. The amount of savings you can expect to receive from R&D Tax Credits will vary based on your specific R&D expenses. However, utilizing R&D Tax Credits can often result in substantial savings for businesses that are engaged in R&D activities.

Disaster Relief FAQ

The Disaster Relief Program in the United States is a program to help citizens who have been affected by natural disasters. It provides resources and assistance to those who have experienced property damage, loss of income, or other negative impacts due to a disaster. If you are wondering how Disaster Relief can help you, here are some frequently asked questions that can provide guidance:

Disaster Relief is available to those affected by hurricanes, floods, earthquakes, windstorms, and other natural disasters where state or federal assistance has been declared.

Disaster Relief eligibility is based on the damage and resources available in each individual situation. Disaster Relief may be available to homeowners, renters, businesses, agricultural operations, and other non-profits as a result of a declared disaster event.

Yes, Disaster Relief may be available to small businesses, agricultural operations, and self-employed individuals who have suffered losses due to a declared disaster event.

To apply for Disaster Relief benefits, you must begin the application process with the disaster relief specialists at American Financial Tax, or contact the Disaster Recovery Center in your area. You may also call FEMA at 1-800-621-FEMA (1-800-621-3362) to begin the application process.

Disaster Relief provides financial assistance, housing resources, and recovery services such as medical and dental care, mental health counseling, and legal aid. Disaster Relief also provides grants for home repairs and other eligible expenses related to the disaster.

The length of time it takes to receive Disaster Relief benefits varies depending on the individual situation. Generally, applicants should expect to receive their Disaster Relief benefits within 45 days of applying.