ERC payment

[gamacpa]

I have a new client 1120-S, who has received ERC payments of $280,000 from IRS in July 2023.  How, when & where do I  report this on clients tax return.   Thank you in advance.

[TaxGirl3]

ERC reduces otherwise deductible wages.  You need to reduce wage expense in the relevant year.  Perhaps you need to amend prior tax returns.

[abctax55]

Perhaps  ?

I would insist on the amending, & probably disengage if the client refused.  And if the entity that received the ERC is a partnership/S-Corp there should also amended returns for the partners/shareholders.

The IRS did issue a notice that the penalties & interest could be waived on the tax due on these amended downstream returns - I don't remember the specifics.

[swiztaxpro]

Yes reduce wages in the year paid, 2020 and 2021.  Then new net income increase and amend related s corp  owner personal return too. 

[gamacpa]

Reduce wages or payroll tax expense?  

Thank you for reply

[gamacpa]

Reduce gross wages or payroll tax expense?

Thank you for reply.

[sjrcpa · Accepted solution]

Wages

[gamacpa]

Thank you

[TaxGirl3]

Perhaps.... because perhaps the original tax returns are currently being filed (late)  🙃