Employee retention credit / PPP / new bill passed

Signed Sunday and you want results today?  The IRS has yet to update their page with the now outdated rules.

At a glance, you now can qualify for a 70% retention credit against up to $10,000 per employee per quarter beginning on the first day of any quarter in 2020 where your gross receipts are 80% or less than same quarter in 2019 but no upper threshold has been identified (prior it was 50% to kick in and 80% to kick out)

You always will be able to enter (right click override) the boxes on the form

AFTER CAREFUL READING of various conflicting sources, even these changes might be a nightmare and even though you now think you qualify, you might not. Please read the following

https://www.natlawreview.com/article/employee-retention-tax-credit-enhanced-and-extended-covid-19-st...

and more importantly

https://www.forbes.com/sites/anthonynitti/2021/12/28/breaking-down-the-changes-to-the-employee-reten...

As you can see, for any eligible wages in 2020 you still have to meet the 50% loss in revenue standard and still only get 50% credit.  The 80% and 70% applies to 2021 wages only paid in the first 2 quarters of 2021

Suffice to say, if you do not qualify for a second round of PPP then you would not qualify for retention credit for 2020 (thresholds)

Duplicate message - disregard

Duplicate message - disregard

Thanks.   Yes we qualify for 2nd round of PPP if we want to pursue it and we would qualify for the credit as our income dropped dramatically from the previous year by more than 75% per quarter.

Thank you for your reply.   Yes I agree my question is probably premature since it was just passed.

I guess I'm mostly curious how others are dealing with this.  Are they waiting until next year to deal with it or will they attempt to manually do it and if so how will they do it?

We qualify for a 2nd PPP loan and for the full retention credit up to the max for each quarter in 2020.  Our income dropped dramatically by 75% or more, so we are sadly in a position to qualify for it.

Sorry to hear how much your business has suffered. No matter what instructions QB lays out I believe you should be prepared to manually calculate your credit(s) to compare with what is generated within the software. This caution comes from having just paid our first National Paid Leave Pay and the errors in the instructions which do  not properly post employer medicare tax into the Covid-19 Expense category and even attempting a liability adjustment will not properly remove said covid medicare from regular medicare, potentially meaning this employee's W2 will have to be manually calculated

I did get today, after my first response in this thread, an email from Intuit that they are in the process of digesting the changes and how they will address them

Oh wow I didn't realize that.   We have that as well.  I'll have to go through it to see how it calculated.  This will be a challenging yearend.

Thanks.  I saw that email as well.   It was almost like they were listening to our messages ; )

Any news about this issue. i have the same question. 

For 2020 there is an either/or as it pertains to gross receipts.  Per the article:

Eligibility Requirements for the Credit

Original Law: Business operations that are either fully or partially suspended by a COVID-19 lockdown order; or, for any quarter in 2020, if gross receipts are less than 50% of gross receipts for the same quarter in 2019.

For example my business was shut down to take-out only from March to April, then allowed to open at 50% capacity June - November 15th and closed for dine in since.  My business was partially shut down since March in varying degrees, therefore for 2020 there is no gross receipt limit.  Just an FYI for those it may be able to help.

John, I came up with a workaround for the incorrect setup of the National Paid Leave Credit, specifically, the Medicare and Health Insurance credits, which were mapped wrong in the instructions from Intuit.

In the Payroll Item setup, they tell you to map both the Liability Account and the Expense account to COVID-19 expenses, which causes your report to give you the wrong amount for the credit to apply on your payroll tax liability payment. For the Medicare credit, map the liability account to your Employer Payroll Tax Expense (or whatever you name it) - not the liability account, the EXPENSE account. For the Health Premium Credit, map the liability account to your Health Insurance Expense account. This will properly reduce both of these expenses to reflect the credit, and your COVID-19 expenses will not be offset by two entries for these credit. The amount in the report will be what you subtract from your payroll liability payment, using the National Paid Leave Credit payroll item. If you do this, your credit will be applied properly, and everything will populate correctly to your 941. I have done this for both 2nd and 3rd quarter of 2020, and everything works - the 941 and the P&L. I hope that helps.

duplicate response

The CAA provides that employers who receive Paycheck Protection Program (PPP)
loans may still qualify for the Employee Retention Credit. However, payroll costs qualifying for
forgiveness do not include wages taken into account in determining the Employee Retention Credit.
The CAA (SEC. 206 (c)(2)(B)(ii)) further provides that an employer may elect for any wages retroactively qualifying for the credit under this provision during any of the first three quarters of 2020 to be deemed paid
during the fourth quarter of 2020 for payroll tax reporting purposes.

How will Intuit Assisted Payroll allow input for the retroactively qualified credit - 4th quarter 941 for 2nd quarter qualifying expenses?

Oh I didn't realize that.  Is it best to just wait for the update to hopefully calculate this credit a little easier?

Yes, I need to know too, I reached out on chat and they were not any help...

moving forward do we just check off that box for each employee to keep track for the

 Employee Retention Credit Regular Hours 

Thanks for following this thread, kchoi411.

This isn’t the kind of impression I want to leave when reaching out to our chat support. Let me point you in the right direction, so all your concerns about Employee Retention Credit Regular Hours are taken care of.

I can see that you already reached out to our chat support about the issue. I still recommend contacting them again for further assistance.

One of our specialists will review the previous case notes and continue the troubleshooting from there. Make sure to go to the PPP Center area of the product and choose the Live Chat option.

For additional resources, click here to learn more on the latest updates about the Paycheck Protection Program. It also contains answers to frequently asked questions.

Don’t hesitate to visit the Community again if you have other QuickBooks concerns. I’m only a few clicks away for help. Have a good one. 

This is so disappointing that the QuickBooks Employees do not answer the questions that are asked. You direct us to the PPP center for help, when the question was about the Employee Retention Credit, not the PPP. This seems to be very common from the employees who post on these threads. It would be very nice to get a useful reply. Thanks.

UPDATED - I FOUND THAT IF I OVERRIDE THE WAGES ON STEP 3 OF THE WORKSHEET 1 THAT THE AMOUNT PULLED TO LINE 21 OF PART 3 AND CALCULATED PROPERLY.  

I am sure the business I am working on meets the criteria for the employee retention credit with the changes that were passed at the end of the year.

I finally have the payroll items set up properly for the employee retention credit and adjusted the payroll checks that would have been affected and eligible for the ERC.  These checks would have been in the 3rd and 4th qtr.  The 941 is working for the wages paid in the 4th quarter but I can't get the wages paid in 3rd qtr to show up on part 3, line 21.  From what I am reading, you can retroactively adjust for the ERC in the 4th qtr for wages paid earlier in the year.  I can't even get QB to allow me to override the amount so it will calculate right nor can I get to the worksheet 1.  Has anyone had any luck? 

Was this ever answered?

still waiting

Reply to Hilary9 about changing the liability account on the payroll item National paid leave-Medicare to payroll expense.  I reduced my liability check by NPLEE to payroll item National paid leave credit and the Medicare employer portion to National paid leave-Medicare. The entry came through fine on books but the form 941 did not recognize the credit for medicare. It only recognized the amount to National paid leave credit.  I did a dummy run with only one employee  for NPLEE and a regular employee.   The 941 is telling me I have an overpayment of the Medicare-employer portion for the NPLEE employee when the liability check is recorded.  

I just thought I would share my work around for this employee retention credit.  I use QB Payroll Online and we are entitled to a refund for the ERC for 2020.  I filed all of my 941s on time during 2020 and need to revise these for the ERC.  I was never able to speak to anyone at QB, nor were my questions answered through QB chat.

I downloaded a website called TaxBandits.com and refiled all 941-Xs for each qtr of 2020.  I was able to file electronically and also speak to a representative that assisted me.  A real live human being!! There is a spot on the form to request the refund via direct deposit or check.  Hope this helps. 

Do you know if we get PPP loan and fully was forgivable ,how  should we apply for ERC in QB for 2021?