Mott Haven NY Employee Retention Specialists

 
Can you take the employee retention credit on the wages paid out of your S corporation to you, the 100% owner? Now, this is a big dispute in the tax expert neighborhood 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 had to lean one way or the other, I would lean in the instructions of stating that owner salaries in so far as we're talking about someone who owns more than 50 percent of business, do not qualify.
  
 
Exactly 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 purposes of the employee retention credit, "guidelines similar to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall apply," don't get caught up on the 1986, that's just the last time the Internal Earnings Code had a major overhaul, so it's just referred to as the Internal Income Code of 1986. The vital part here is those other code areas reference.

Because that's the easy one, let's begin with 280C(a). That is just saying 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 exact same incomes. Now let's talk about area 51(i)( 1 ), which says, "No wages shall be taken into account ...

with respect to an 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 person, directly or straight, 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 provision that states "if the taxpayer is a corporation" due to the fact that 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 assuming an S corp taxpayer here.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 deduction for those same incomes. Let's focus on the stipulation that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.

So this is saying that you do not take into account incomes with regard to a person who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. This is saying that you don't take into account salaries with regard to an individual who owns, directly or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. That appears clear to me that owner salaries do not certify. Now, some tax professionals 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 wages paid by an employer to staff members who relate people considered certified salaries?

" and they're stating, "Look at the answer here. It's only these relatives whose earnings do not count. And the IRS didn't specifically state owner salaries or partner incomes do not count here, so bad-a-boo, bad-a-bing, for that reason owner salaries need to 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 salaries don't count. The IRS site is not the tax code.