Jackson Heights NY Employee Retention Credit For Self Employed

 
Can you take the employee retention credit on the salaries paid of your S corporation to you, the 100% owner? Now, this is a huge dispute 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 needed to lean one way or the other, I would lean in the direction of stating that owner wages in so far as we're speaking about someone who owns more than 50 percent of business, do not certify.
  
 
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I do not want to get too technical here, however Area 2301(e) of the CARES Act -- which created the employee retention credit -- states that for purposes of the employee retention credit, "guidelines similar to the rule of sections 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 shall apply," don't get captured up on the 1986, that's just the last time the Internal Profits Code had a significant overhaul, so it's simply referred to as the Internal Income Code of 1986. The important part here is those other code areas referral.

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

with respect to regard individual who person 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 owns, directly or straight, 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 indirectly, 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" since we're assuming an S corp taxpayer here.Let's focus on the provision 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 earnings you pay in your organization, you can't double dip and take a deduction for those exact same wages. Let's focus on the clause that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.

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

" and they're saying, "Look at the response here. It's just these loved ones whose incomes don't count. And the IRS didn't specifically state owner wages 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 state, "Look. The IRS website is not the tax code. That appears clear to me that owner wages do not certify. It's just these relatives whose salaries do not count. The IRS site is not the tax code.