Business owners need to make choices on their 2021 taxes regarding the Paycheck Protection Program and the Employee Retention Credit. Both were enacted to help businesses stay in operation during the lockdowns caused by the COVID-19 pandemic.
The PPP provided forgivable loans to businesses, and the ERC was intended to prevent layoffs. When these programs were first enacted, businesses had to choose between one or the other, but that changed once the Consolidated Appropriations Act of 2021 was passed.
Along with the relief the CAA provided by allowing businesses to receive a PPP loan and claim the ERC, the CAA also added a level of complexity for businesses seeking to maximize their tax savings under these programs.
The implications of these complications include the following:
The laws and regulations governing PPP loan forgiveness and the ERC are complex. Plus, there are many nuances to how the applicable provisions can be applied. Businesses seeking to maximize their tax savings should consult with qualified tax advisors.
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