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Employee retention Credit
Where does the employee retention credit get entered?
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Per IRS instructions for Form 1120S, page 16, 2nd column for Line 7 and Line 8..... reported wages are reduced by the ERC. The instructions also repeat this in page 17, top of 2nd column .....do not reduce taxes reported....reduce Wages and salaries.
"it says to reduce the amount on line 7 by the credit, but then my officer wages are really understated when the IRS would compare them to "reasonable compensation". This is what I was trying to avoid."
Well, are you pushing the line for "reasonable?"
"If the corporation claims a credit for any wages paid or incurred, it may need to reduce the amounts on lines 7 and 8. See Reducing certain expenses for which credits are allowable, earlier. Also reduce the amounts reported on lines 7 and 8 by the nonrefundable and refundable portions of the new CARES Act employee retention credit claimed on the corporation's employment tax return(s)."
From the 1120S instructions.
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