Mount Vernon NY Employee Retention Credit For Self Employed

 
Can you take the employee retention credit on the incomes paid of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax professional community today. I'm not going to hang my hat on any one position up until we get more information from the IRS on this, however if I needed to lean one method or the other, I would lean in the instructions of saying that owner salaries in so far as we're speaking about somebody who owns more than 50 percent of the company, do not certify.
  
 
Exactly How It Works
I don't wish to get too technical here, however Section 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for functions 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 just the last time the Internal Earnings Code had a significant overhaul, so it's simply referred to as the Internal Income Code of 1986. The fundamental part here is those other code sections reference.

Let's begin with 280C(a) since that's the simple one. 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 deduction for those exact same salaries. 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 person, directly or indirectly, 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 person, directly or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's focus on the provision that states "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.That is just saying that if you get a credit on some earnings you pay in your business, you can't double dip and take a reduction for those exact same salaries. Let's focus on the clause that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

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

" and they're saying, "Look at the response here. It's only these relatives whose wages don't count. And the IRS didn't specifically state owner earnings or partner earnings do not count here, so bad-a-boo, bad-a-bing, therefore owner earnings must 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 qualify. It's just these relatives whose wages don't count. The IRS website is not the tax code.