Mott Haven NY Employee Retention Tax Credit 2021

 
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 today. I'm not going to hang my hat on any one position until we get more clarification from the IRS on this, but if I had to lean one method or the other, I would lean in the direction of saying that owner incomes in so far as we're speaking about someone who owns more than 50 percent of the company, do not qualify.
  
 
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I do not want to get too technical here, however Area 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for purposes of the employee retention credit, "guidelines similar to the rule of areas 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall apply," do not get captured up on the 1986, that's simply the last time the Internal Earnings Code had a major overhaul, so it's just referred to as the Internal Revenue Code of 1986. The fundamental part here is those other code areas referral.

Since that's the easy one, let's begin with 280C(a). That is simply saying that if you get a credit on some earnings you pay in your service, you can't double dip and take a deduction for those same wages. However now let's talk about section 51(i)( 1 ), which says, "No incomes will be taken into consideration ...

with regard to an individual who bears any of the relationships described in subparagraphs (A) through (G) of area 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, straight or indirectly, more than 50 percent in worth of the exceptional stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any individual who owns, straight or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's concentrate 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" due to the fact that we're assuming an S corp taxpayer here.That is just stating that if you get a credit on some wages you pay in your organization, you can't double dip and take a reduction for those very same wages. Let's focus on the clause that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.

So this is saying that you don't consider earnings with respect 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 incomes with regard to an individual who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That seems clear to me that owner incomes do not qualify. Now, some tax specialists are taking a look at the employee retention credit certified earnings FAQs on the IRS site, and they're taking a look at FAQ 59, which states, "Are incomes paid by a company to employees who belong people considered certified earnings?

" and they're stating, "Look at the response here. It's only these loved ones whose wages do not count. And the IRS didn't specifically state owner incomes or spouse incomes don't count here, so bad-a-boo, bad-a-bing, therefore owner wages need to count." To that, I would state, "Look. The IRS website is not the tax code. That seems clear to me that owner earnings do not qualify. It's just these loved ones whose incomes don't count. The IRS website is not the tax code.