Clay NY Employee Retention Credit For Self Employed

 
Can you take the employee retention credit on the wages paid of your S corporation to you, the 100% owner? Now, this is a big dispute in the tax expert neighborhood right now. I'm not going to hang my hat on any one position up until 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 salaries in so far as we're discussing someone who owns more than 50 percent of the organization, do not qualify.
  
 
Exactly How It Works
I don't wish to get too technical here, but Section 2301(e) of the CARES Act -- which developed the employee retention credit -- says that for purposes of the employee retention credit, "guidelines similar to the rule of sections 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 shall use," don't get caught up on the 1986, that's just the last time the Internal Revenue Code had a major overhaul, so it's simply referred to as the Internal Revenue Code of 1986. The fundamental part here is those other code sections recommendation.

Since that's the easy one, let's begin with 280C(a). That is simply stating that if you get a credit on some wages you pay in your business, you can't double dip and take a reduction for those same earnings. And now let's discuss section 51(i)( 1 ), which states, "No incomes shall be taken into consideration ...

with regard to an individual who bears any of the relationships explained in subparagraphs (A) through (G) of section 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 impressive stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any individual who owns, straight or indirectly, more than 50 percent of the capital and earnings 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 provision that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.That is just saying that if you get a credit on some incomes you pay in your company, you can't double dip and take a deduction for those same incomes. Let's focus on the clause that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.

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

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