Are Illinois Tax Credits to Relieve Minimum Wage Increase Taxable for Federal and State purposes?

[AnmarieA]

Intuit Payroll calculated and filed for my client the IL Minimum Wage Credit each quarter and my client has received these credits to the tune of $9K in 2021. Are these credits taxable for federal and state purposes? I see that the Economic Retention Credits are Non Taxable and there is a place to record in the Pro Connect software but I do not see a place to enter the IL Minimum Wage Credit. Can you direct me to the IRS and IDOR ruling on the tax treatment of such credits.

[AnmarieA]

I referenced the Economic Retention Credit and it should have said the Employee Retention Credit (ERC) and it being a Taxable Item in the Business return as a reduction in Expense. But I would also like clarity on this that even the ERC is accounted for in the year the wages are paid and not the year the credit is received. For example Intuit (The Payroll processor for my client) amended the Qtr 2 of 2021 Federal 941 in January 2022 but the actual ERC credit was not received by my client until June 2022 but such credit should be reported on the 2021 Business Return as a reduction in Wages since even though the credit was not received until the following year. 

Can someone confirm that the ERC and IL minimum wage credit are both taxable items and reported in the year the wages were paid?

Hope this clarifies. 

[sjrcpa]

The ERC reduces the wage deduction for the year the wages were paid. So, 2021 in your example.

I have no knowledge of the IL credit.