Brentwood NY Employee Retention Credit For Self Employed

 
Can you take the employee retention credit on the earnings paid of your S corporation to you, the 100% owner? Now, this is a huge dispute in the tax professional community today. I'm not going to hang my hat on any one position up until we get more information from the IRS on this, but if I had to lean one way or the other, I would lean in the instructions of stating that owner wages in so far as we're speaking about somebody who owns more than 50 percent of the business, do not certify.
  
 
Just how It Functions
I do not wish to get too technical here, but Area 2301(e) of the CARES Act -- which created the employee retention credit -- states that for functions of the employee retention credit, "rules comparable to the rule of areas 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 will apply," do not get captured up on the 1986, that's simply the last time the Internal Income Code had a significant overhaul, so it's simply described as the Internal Income Code of 1986. The vital part here is those other code sections recommendation.

Since that's the simple one, let's begin with 280C(a). That is just saying that if you get a credit on some incomes you pay in your business, you can't double dip and take a deduction for those exact same salaries. Now let's talk about section 51(i)( 1 ), which says, "No incomes will be taken into account ...

with respect to regard individual who person any of the relationships described in explained (A) through (G) of section 152Aread)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than 50 percent in value of the outstanding stock exceptional the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or indirectly, more than 50 percent of the capital and profits interests earnings the entity." So let's focus on the clause that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.That is just stating that if you get a credit on some salaries you pay in your service, you can't double dip and take a deduction for those same earnings. Let's focus on the provision that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.

So this is saying that you do not take into account incomes with respect to an individual who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. This is stating that you do not take into account salaries with respect to an individual who owns, straight or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That seems clear to me that owner earnings do not qualify. Now, some tax professionals are taking a look at the employee retention credit certified incomes FAQs on the IRS site, and they're taking a look at FAQ 59, which states, "Are wages paid by an employer to workers who relate people considered certified incomes?

" and they're saying, "Look at the response here. It's just these relatives whose wages don't count. And the IRS didn't particularly state owner salaries or partner incomes do not count here, so bad-a-boo, bad-a-bing, for that reason owner incomes need to count." To that, I would say, "Look. The IRS site is not the tax code. That appears clear to me that owner salaries do not certify. It's just these relatives whose earnings don't count. The IRS site is not the tax code.