Greenburgh NY Employee Retention Credit Eligibility

 
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 huge argument in the tax expert neighborhood today. I'm not going to hang my hat on any one position until we get more explanation from the IRS on this, however if I had to lean one method or the other, I would lean in the instructions of saying that owner earnings in so far as we're speaking about somebody who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Works
I do not desire to get too technical here, however Section 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for purposes of the employee retention credit, "rules similar to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 shall apply," don't get captured up on the 1986, that's simply the last time the Internal Income 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 areas recommendation.

Since that's the simple one, let's begin with 280C(a). That is just stating that if you get a credit on some incomes you pay in your business, you can't double dip and take a reduction for those very same wages. Now let's talk about area 51(i)( 1 ), which says, "No earnings will be taken into account ...

with respect to an individual who bears any of the relationships described in subparagraphs (A) through (G) of section 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who person, directly or indirectly, more than 50 percent in value of worth outstanding 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 revenues the entity." So let's focus on the clause that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.That is simply saying that if you get a credit on some earnings you pay in your business, you can't double dip and take a deduction for those very same earnings. Let's focus on the stipulation that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

So this is saying that you do not take into account earnings with respect to a person who owns, directly 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 incomes with respect to a person who owns, straight or indirectly, more than 50 percent in value of the outstanding stock of the corporation. That seems clear to me that owner incomes do not qualify. Now, some tax professionals are looking at the employee retention credit qualified incomes FAQs on the IRS website, and they're looking at FAQ 59, which states, "Are wages paid by a company to staff members who are related people thought about certified wages?

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