Who may file IRS form 7200?
Form 7200, the Advance Payment of Employer Credits Due to COVID-19, has to be filed by businesses and tax-exempt organizations that file Form(s) 941, 943, 944, or CT-1. >br>
Few must-knows on the process to claim tax credits:
First, reconcile the advance credit payments and reduced deposits on the employment tax return that is to be filed for 2020.
Second, reduce the employment tax deposits to account for credits. If the amount of the request for credit exceeds the reduced deposits, file Form 7200. If not, no employer is required to file Form 7200.
You may wait to receive your refund while you claim the credits on your employment tax return.
Restrictions on Advance Payment of refundable tax credits:
1. The IRS has imposed a set of restrictions on an employer's eligibility in requesting an advance payment of the tax credits.
2. Self-employed individuals are not entitled to advance payment of credits for sick and family leave.
3. Any employer that is benefitting out of Small Business Interruption Loan under the CARES Act is not supposed to claim the employee retention credit.
4. An employer might receive a credit for qualified leave wages under the FFCRA (Families First Coronavirus Response Act). However, those wages don't count as qualified wages as per the CARES Act (Coronavirus Aid, Relief and Economic Security Act).