Cheektowaga NY Employee Retention Ertc Credit

 
Can you take the employee retention credit on the wages paid out of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax expert community right now. I'm not going to hang my hat on any one position till we get more explanation from the IRS on this, but if I needed to lean one way or the other, I would lean in the direction of saying that owner wages in so far as we're speaking about someone who owns more than 50 percent of the service, do not qualify.
  
 
Exactly How It Functions
I do not want 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, "guidelines comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall use," don't get captured up on the 1986, that's just the last time the Internal Earnings Code had a significant overhaul, so it's simply described as the Internal Profits Code of 1986. The fundamental part here is those other code areas recommendation.

Let's start with 280C(a) since that's the easy one. That is just saying that if you get a credit on some wages you pay in your service, you can't double dip and take a deduction for those very same salaries. Today let's speak about section 51(i)( 1 ), which says, "No salaries shall be taken into account ...

with respect to a person who bears any of the relationships described in subparagraphs (A) through (G) of area 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to a person who owns, straight or indirectly, more than 50 percent in value of the outstanding stock of the corporation, or, if the taxpayer is an entity besides 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 concentrate on the stipulation that says "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.Let's focus on the stipulation that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.That is simply stating that if you get a credit on some wages you pay in your service, you can't double dip and take a reduction for those same earnings. Let's focus on the stipulation that states "if the taxpayer is a corporation" because we're presuming 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 exceptional stock of the corporation. This is stating that you don't take into account incomes with regard to an individual who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That appears clear to me that owner salaries do not certify. Now, some tax specialists are looking at the employee retention credit certified wages FAQs on the IRS website, and they're looking at FAQ 59, which says, "Are incomes paid by an employer to workers who belong people thought about qualified wages?

" and they're stating, "Look at the response here. It's just these family members whose earnings do not count. And the IRS didn't specifically state owner incomes or spouse wages don't count here, so bad-a-boo, bad-a-bing, therefore owner earnings must count." To that, I would state, "Look. The IRS site is not the tax code. That appears clear to me that owner earnings do not certify. It's just these family members whose salaries don't count. The IRS site is not the tax code.