Bayside NY Employee Retention Tax Credit 2022

 
Can you take the employee retention credit on the wages paid of your S corporation to you, the 100% owner? Now, this is a huge argument in the tax professional neighborhood today. I'm not going to hang my hat on any one position until we get more information from the IRS on this, but if I had to lean one method or the other, I would lean in the instructions of saying that owner incomes in so far as we're discussing someone who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Works
I don't wish to get too technical here, however Section 2301(e) of the CARES Act -- which created the employee retention credit -- states that for purposes of the employee retention credit, "guidelines similar to the rule of areas 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will use," don't get captured up on the 1986, that's just the last time the Internal Earnings Code had a major overhaul, so it's just described as the Internal Revenue Code of 1986. The essential part here is those other code sections reference.

Let's begin with 280C(a) because that's the easy one. That is simply saying that if you get a credit on some earnings you pay in your organization, you can't double dip and take a reduction for those very same wages. Today let's speak about section 51(i)( 1 ), which states, "No wages shall be considered ...

with regard to an individual who bears any of the relationships explained in subparagraphs (A) through (G) of area 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any person who owns, straight or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's focus on the clause that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.Let's focus on the stipulation that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.That is simply saying that if you get a credit on some incomes you pay in your organization, you can't double dip and take a deduction for those very same salaries. Let's focus on the clause that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

So this is stating that you don't take into consideration wages with respect to an individual who owns, straight or indirectly, more than 50 percent in value of the outstanding stock of the corporation. This is saying that you don't take into account wages with regard to a person who owns, straight or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That appears clear to me that owner salaries do not qualify. Now, some tax experts are taking a look at the employee retention credit certified incomes FAQs on the IRS website, and they're taking a look at FAQ 59, which states, "Are incomes paid by an employer to staff members who are associated individuals thought about qualified wages?

" and they're stating, "Look at the response here. It's only these family members whose incomes don't count. And the IRS didn't specifically say owner wages or partner incomes don't count here, so bad-a-boo, bad-a-bing, therefore owner wages should count." To that, I would say, "Look. The IRS site is not the tax code. That seems clear to me that owner wages do not qualify. It's just these loved ones whose salaries don't count. The IRS site is not the tax code.