Clay NY Employee Retention Tax Credit 2022

 
Can you take the employee retention credit on the incomes paid out of your S corporation to you, the 100% owner? Now, this is a big argument in the tax expert community today. I'm not going to hang my hat on any one position till we get more information from the IRS on this, however if I had to lean one method or the other, I would lean in the direction of saying that owner wages in so far as we're talking about somebody who owns more than 50 percent of the organization, do not qualify.
  
 
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I do not want to get too technical here, but Area 2301(e) of the CARES Act -- which developed the employee retention credit -- says that for functions of the employee retention credit, "rules similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 will use," don't get caught up on the 1986, that's simply the last time the Internal Profits Code had a major overhaul, so it's simply referred to as the Internal Earnings Code of 1986. The important part here is those other code areas referral.

Because that's the easy one, let's start with 280C(a). That is just stating that if you get a credit on some incomes you pay in your organization, you can't double dip and take a reduction for those same wages. However now let's talk about section 51(i)( 1 ), which states, "No salaries will be considered ...

with respect to a person 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 exceptional stock of 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 in the entity." So let's focus on the clause that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.That is simply stating that if you get a credit on some wages you pay in your company, you can't double dip and take a reduction for those exact same salaries. Let's focus on the provision 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 consider wages with regard to an individual who owns, straight or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. This is stating that you don't take into account incomes with respect to a person who owns, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation. That appears clear to me that owner incomes do not certify. Now, some tax specialists are looking at the employee retention credit qualified earnings FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are earnings paid by a company to staff members who belong individuals considered certified salaries?

" and they're stating, "Look at the response here. It's only these relatives whose earnings do not count. And the IRS didn't particularly say owner wages or spouse salaries do not count here, so bad-a-boo, bad-a-bing, therefore owner salaries 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 qualify. It's only these relatives whose wages do not count. The IRS site is not the tax code.