The federal government recently announced that it was giving businesses grants of between $10,000 and $100,000 to help them with payroll costs. This program has been set up so that the money is refundable tax credits.
Therefore, if your business earns $200,000 in income tax, but you only paid $150,000, you will be eligible for a credit of $50,000. This will allow you to have a lower taxable income than the one you had when you paid your taxes.
Business owners can apply for the grants, but they have to be US citizens or residents, US nationals and legal permanent residents. Businesses have the option to use the money for anything that is allowed under their current Employee Retention Credit (ERC) tax liability and to have the funds deducted directly from paychecks. Businesses are expected to make a good faith effort to retain their existing workforce during this time of crisis and maintain social distancing.
The ERC is just one part of the coronavirus stimulus package, which includes a series of tax rebates. The other two big parts are the Paycheck Protection Program and the Families First Coronavirus Response Act.
