Contents:

3 min read

    3 min read

    What would you say if I told you there is a special government tax credit that you’ve never heard about, but it will earn you a cool $5,000? You might say it’s a scam – but it’s not! Today, I’ll talk to the accounting firm in Utah that discovered this tax credit, and how you can get it. 

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    When I first heard about this tax credit, I was skeptical. We decided to investigate this tax credit for ourselves, and were pleasantly surprised to find out it’s not a scam – it’s a legit tax credit for 1099 workers. In this episode, I’ll talk to Mason Warr, CEO and Co-Founder of COS Accounting, about the credit, costs associated with it, and when it expires. 

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    Intro to Mason Warr

    • COS Accounting founded in 2019 by Mason Warr and Zach Bassett
    • Saw a need and a way to help independent contractors
    • Specializes in helping 1099 employees set up LLCs and S-Corps to help save on taxes

    Employee Retention Tax Credit

    • When the CARES Act passed, ERC was part of it – but was mostly overlooked
    • Stimulus for your business
    • If you earn $10,000 or more, you would qualify for the maximum credit of $5,000 (minus payroll tax)
    • EIDL and PPP were both loans – this is a tax credit

    What to Know About the ERC

    • Expires at the end of the year!
    • ERC may be extended by the government – not a guarantee
    • Rideshare drivers definitely impacted – fewer people out at bars, airports, etc.
    • 50% reduction in gross sales

    How Getting the ERC Works

    • Best way to save on taxes and qualify as an employee, set up an LLC taxed as an S-Corp
    • Lyft/Uber pays your LLC – Your LLC pays you – you’re an employee of your LLC
    • Could do it just as an LLC, too – just more effective as an S-Corp
    • If you’re making $5,000 or more in profit, you will benefit from an S-Corp

    Disqualifications for the ERC

    • If you received a PPP loan
    • If you received 4 weeks of unemployment in one quarter
    • If COVID didn’t affect you, then you wouldn’t qualify

    Is the ERC a Scam?

    • In a world where we are all meeting virtually, how can people be sure this isn’t a scam?
    • If you’re not sure, ask your accountant or call an accounting firm and confirm
    • Call the IRS to see if it’s real!
    • RSG looked into it – were pleasantly surprised! Low risk to take a call and see if it would benefit you

    Fees Associated with the ERC Credit

    • Taxes are around 15.3% – check will be $3,470
    • Many people have to be restructured from a 1099 to an LLC
    • States have their own particular taxes
    • Around $1200-1300 total after taxes and fees
    • Some drivers do qualify for more than the $5,000 tax credit – depends on your situation

    Outro

    • Thanks to Mason for coming on the podcast!
    • It’s a free consultation – so if it doesn’t work for you, you haven’t spent any money
    • You’ll probably spend around 3-4 hours figuring this out for a potential $2,000 pay out
    • Low risk, potentially high reward

    Show Notes

    Harry Campbell

    Harry Campbell

    I'm Harry, the owner and founder of The Rideshare Guy Blog and Podcast. I used to be a full-time engineer but now I'm a rideshare blogger! I write about my experience driving for Uber, Lyft, and other services and my goal is to help drivers earn more money by working smarter, not harder.