Two tax credits in the COVID stimulus can result in a big cash incentive.

While there’s a lot of attention been given to the latest renewal of the PPP program, there are 2 tax credits included in 2020 December month’s Taxpayer Certainty & Disaster Tax Relief Act that actually may be more valuable for many hotel businesses.

Because the Paycheck Protection Program is a forgivable loan that is exclusively available to certain businesses only, but whereas the employee retention tax credit & the work opportunity tax credit are both potential cash payments that are accessible to a greater number of businesses.

Sounds interesting? You should be. Because if your hotel business is still operational but has been at least partially affected by the COVID pandemic, then you are most probably eligible.

To be eligible for the tax credit of employee retention in the 1st or 2nd quarter of 2021 you must basically show that your business had fewer than five hundred full-time-equivalent employees and was either fully or partially shut down the doors due to COVID restrictions.

Even if you do not match the requirements of shutdown, you can qualify still by demonstrating that your hotel revenues (defined as total number of sales, net returns & allowances) declined in either quarter by more than 20 percent compared with the same quarter in the year 2019 (hoteliers that did not exist in the year 2019 can use the corresponding quarter in 2020 year to measure the decline in their gross receipts).

That threshold is actually lower than what is compulsory to access the PPP funds, which strictly requires showing a 25 percent reduction in hotel revenues. Assuming you as a hotelier qualify,

you would be surprised at just how much money your business save. So here is how you’ll figure out that.

Combined, both work opportunity tax credits and the employee retention could result in a big cash incentive for many hotel businesses, particularly for those that may not even qualify for the second round of PPP. The only caveat we’ll found is that calculating both credits isn’t intuitive or easy because, well, it’s the IRS. So you must perhaps require an engaged professional accountant to help your throughout. However, your returns for doing that should well exceed your costs – particularly of which leaving money on the table in a year when every dollar counts.

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