Greece NY Employee Retention Tax Credit 2021

 
Can you take the employee retention credit on the earnings paid out of your S corporation to you, the 100% owner? Now, this is a huge argument in the tax professional 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 incomes in so far as we're discussing somebody who owns more than 50 percent of business, do not qualify.
  
 
Exactly How It Functions
I do not wish to get too technical here, however Section 2301(e) of the CARES Act -- which produced the employee retention credit -- states that for functions of the employee retention credit, "guidelines comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will apply," don't get captured up on the 1986, that's just the last time the Internal Revenue Code had a major overhaul, so it's just described as the Internal Profits 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 just saying that if you get a credit on some salaries you pay in your company, you can't double dip and take a deduction for those same wages. Now let's talk about area 51(i)( 1 ), which says, "No salaries shall be taken into account ...

with respect to an 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 worth 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 concentrate on the clause that says "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.Let's focus on the clause that says "if the taxpayer is a corporation" because 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 business, you can't double dip and take a deduction for those very same incomes. Let's focus on the clause that says "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.

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

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