Greece NY Employee Retention Credit Taxable Income

 
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 argument in the tax expert community right now. 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 way or the other, I would lean in the direction of saying that owner salaries in so far as we're speaking about somebody who owns more than 50 percent of the business, do not certify.
  
 
Exactly How It Works
I do not desire to get too technical here, however Area 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for purposes of the employee retention credit, "guidelines similar to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will apply," don't get caught 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 areas recommendation.

Because that's the simple one, let's begin with 280C(a). That is simply saying that if you get a credit on some wages you pay in your organization, you can't double dip and take a deduction for those very same incomes. Now let's talk about section 51(i)( 1 ), which states, "No earnings shall be taken into account ...

with respect to regard individual who person any of the relationships described in subparagraphs (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 of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or straight, more than 50 percent of the capital and profits interests in the entity." So let's concentrate on the provision that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.Let's focus on the clause 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 reduction for those exact same earnings. Let's focus on the clause that says "if the taxpayer is a corporation" since we're presuming 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 value of the impressive stock of the corporation. This is stating that you do not take into account wages with regard 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 wages do not certify. Now, some tax professionals are looking at the employee retention credit qualified earnings FAQs on the IRS website, and they're taking a look at FAQ 59, which states, "Are wages paid by an employer to workers who relate people considered certified salaries?

" 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 particularly say owner salaries or spouse incomes do not count here, so bad-a-boo, bad-a-bing, therefore owner incomes should count." To that, I would say, "Look. The IRS site is not the tax code. That appears clear to me that owner wages do not qualify. It's just these relatives whose earnings don't count. The IRS website is not the tax code.