Jackson Heights NY Employee Retention Credit Under The Cares Act

 
Can you take the employee retention credit on the earnings paid of your S corporation to you, the 100% owner? Now, this is a big debate in the tax professional neighborhood 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 needed to lean one method or the other, I would lean in the instructions of stating that owner wages in so far as we're speaking about someone who owns more than 50 percent of the organization, do not qualify.
  
 
Just how It Functions
I don't desire to get too technical here, but Area 2301(e) of the CARES Act -- which created the employee retention credit -- says that for functions of the employee retention credit, "rules comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will use," 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 just referred to as the Internal Profits Code of 1986. The vital part here is those other code areas recommendation.

Let's start with 280C(a) because that's the easy one. That is just saying that if you get a credit on some wages you pay in your company, you can't double dip and take a deduction for those exact same incomes. Now let's talk about section 51(i)( 1 ), which states, "No wages shall be taken into account ...

with respect to regard 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 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 in the entity." So let's focus on the provision 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" because 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 exact same incomes. Let's focus on the provision that states "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.

So this is stating that you do not take into account earnings with regard to an individual who owns, straight or indirectly, more than 50 percent in worth of the impressive stock of the corporation. This is stating that you don't take into account salaries with regard 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 earnings do not certify. Now, some tax professionals are taking a look at the employee retention credit qualified incomes FAQs on the IRS website, and they're taking a look at FAQ 59, which states, "Are salaries paid by a company to staff members who belong people considered certified incomes?

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