Greenburgh NY Employee Retention Credit For Self Employed

 
Can you take the employee retention credit on the salaries paid out of your S corporation to you, the 100% owner? Now, this is a huge argument in the tax expert community today. 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 had to lean one method or the other, I would lean in the instructions of stating that owner wages in so far as we're discussing someone who owns more than 50 percent of business, do not certify.
  
 
Just how It Functions
I do not wish to get too technical here, however Section 2301(e) of the CARES Act -- which created the employee retention credit -- states that for purposes of the employee retention credit, "rules comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 shall apply," do not get captured up on the 1986, that's simply the last time the Internal Revenue Code had a major overhaul, so it's simply described as the Internal Income Code of 1986. The crucial part here is those other code sections recommendation.

Let's start with 280C(a) since that's the easy one. That is simply stating that if you get a credit on some earnings you pay in your organization, you can't double dip and take a deduction for those exact same earnings. Now let's talk about area 51(i)( 1 ), which states, "No earnings will 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 straight, more than 50 percent in value of the outstanding stock exceptional 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 stipulation that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.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.That is just stating that if you get a credit on some earnings you pay in your organization, you can't double dip and take a reduction for those very same earnings. Let's focus on the clause that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

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

" and they're stating, "Look at the answer here. It's just these loved ones whose earnings don't count. And the IRS didn't particularly state owner incomes or spouse incomes don't count here, so bad-a-boo, bad-a-bing, therefore owner incomes need to 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 certify. It's only these loved ones whose earnings do not count. The IRS site is not the tax code.