Frequently asked question #84 “Are qualified wages excluded from gross income as qualified disaster relief payments?” under the Special Issues for Employees: Income and Deduction section of FAQs: Employee Retention Credit under the CARES Act, provided by the IRS.gov to help business owners understand the ERC program. Information is below for the question #84 Are qualified wages excluded from gross income as “qualified disaster relief payments”?
ERC Credit Frequently Asked Question #84:
COVID-19-Related Employee Retention Credits:
Special Issues for Employees: Income and Deduction FAQs
84. Are qualified wages excluded from gross income as “qualified disaster relief payments”?
No. Section 139 of the Internal Revenue Code (the “Code”) excludes from a taxpayer’s gross income certain payments to individuals to reimburse or pay for expenses related to a qualified disaster (“qualified disaster relief payments”).
Although the COVID-19 outbreak is a “qualified disaster” for purposes of section 139 the Code, qualified wages are not excludible qualified disaster relief payments, because qualified wages are what an individual would otherwise earn as compensation, rather than payments to offset any particular expenses that an individual would incur due to COVID-19.
Section 139(c)(2) of the Code provides that for purposes of section 139 of the Code, the term “qualified disaster” includes a disaster determined by the President to warrant assistance by the Federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121 – 5207.
The President has made such a disaster determination for all 50 states, the District of Columbia, and all U.S. Territories. A “qualified disaster relief payment” is defined by section 139(b) of the Code to include any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster.
Qualified disaster relief payments do not include qualified wages paid by an employer, even those that are paid when an employee is not providing services.
For more Internal Revenue Service (IRS) Department of the Treasury Employee Retention Credit (ERC) Special Issues for Employees: Income and Deduction FAQs, visit the official IRS.gov tax website.
Conclusion and Summary on ERC Credit FAQ #84. Are qualified wages excluded from gross income as “qualified disaster relief payments”?
The “Are qualified wages excluded from gross income as qualified disaster relief payments?” is Frequently Asked Question #84 of many commonly asked questions small business owners are wondering about how to file the Employee Retention Tax Credit (ERTC). The IRS ERC Tax Credit program is a confusing and complex process to determine the correct ERC calculations your business qualifies for. Answers to “Are qualified wages excluded from gross income as qualified disaster relief payments?” and filling out form 941-X may change slightly from frequently updated rules and regulations from the IRS. Leave a comment below if you have further questions on ERC Credit FAQ #84.
Help Completing / Filing / Claiming the Employee Retention Credit (ERC)
Receive Up to a $26,000 ERC Credit from the IRS Per Employee
Disaster Loan Advisors can assist your business with the complex and confusing Employee Retention Credit (ERC), Form 941-X, and the Employee Retention Tax Credit (ERTC) program.
Depending on eligibility, business owners and companies can receive up to $26,000 per employee based on the number of W2 employees you had on the payroll in 2020 and 2021.
The ERC / ERTC Tax Credit Program is a valuable IRS tax credit you can claim. This is money you have already paid to the IRS in payroll taxes for your W2 employees.
We DO NOT charge a percentage (%) of your ERC Refund like some companies are charging. Some ERC firms out there are charging upwards of 15% to 35% of your ERC refund!
Our professional ERC fee and pricing structure is very reasonable in comparison.
If you are looking for an ERC Company that believes in providing professional ERC Services and value, in exchange for a fair, reasonable, and ethical fee for the amount of work required, Disaster Loan Advisors is a good fit for you.
Schedule Your Free Employee Retention Credit Consultation to see what amount of employee retention tax credit your company qualifies for.
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As a leading dedicated member of the Tax and Accounting Team at Disaster Loan Advisors™, Mark focuses on unlocking the ERC Tax Credit's potential for eligible firms that qualify, providing strategic advice, and detailed guidance to ensure substantial financial recovery and growth. His methodical approach to client engagement includes comprehensive deep-dive analysis, customized consultation and guidance, and a commitment to achieving tangible results for each business served.
Disaster Loan Advisors™ (DLA) offers a comprehensive suite of services designed to navigate the complexities of the Employee Retention Tax Credit (ERC) program, ensuring that qualified businesses leverage the maximum possible benefit with minimum hassle. Unlike some firms that charge exorbitant contingency or percentage-based fees (often between 10% to 30% of your ERC refund), DLA operates on a fair and reasonable, transparent flat-fee structure that aligns with the IRS's guidelines.
If you are looking for an ERC Company that believes in providing professional ERC Services and value for small business owners, in exchange for a fair, reasonable, and ethical fee for the amount of work required, Disaster Loan Advisors™ is a good fit for you. STAY SAFE. STAY COMPLIANT. KEEP MORE OF YOUR REFUND.™
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- 941-X: 16. Qualified Small Business Payroll Tax Credit for Increasing Research Activities, Form Instructions (updated 2024) - April 28, 2024
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