EMPLOYEE RETENTION CREDIT where to Enter 1120-S

[qbteachmt]

@kbtaxlady 

"Do we report as other income?

Are we using form 5884-a?"

Did you read this topic at all? Clearly, it's been stated more than once ERC from covid has nothing to do with Form 5884-A. It's in this topic. It's in the links. If you come to a 2-year old topic, the least you can do is read the input, and the guidance to stop relying on 2-year old topics, as well.

Sorry to be peevish, but the info you seek is right here. Even when amending prior years, it's not income and it's not put on Form 5884-A.

It has nothing to do with 2022, because it is from Payroll tax. Not income tax. It applies to the timeframe that was used to qualify.

[TTA]

the IRS paid employers interest for the ERTC checks, the interst recieved should be reported as Other Income  in the year the interest were recived.

[TTA]

Does anyone ifnd any instructions from the AICPA about the journal entries and accounting for the ERTC? anyone has any journal enries that can be shared with us?

thanks

[msmith7305]

In regards to reducing the wage expense on the amended 1120S, the instructions say to reduce the wage expense for officer's compensation (line 7) and the other wages (line 8). My client has only provided the IRS notices received for each quarter which gives me the credit amount and interest paid. Is there an easy way to find out the allocation between officer's wages and other wages? Or, should I just reduce the other wages and call it a day?

[sjrcpa]

Ask the client for the schedule of wages used to compute the ERC. If the officer is a >50% owner, none of the officer's wages should have been used.

[msmith7305]

Client used Innovation Refunds. They in turn used a CPA firm to do the calculations.

Client gave them payroll data but the client, of course, does not know how the credit was calculated.

I asked the client to get what I need from Innovation Refunds. All I need is the amount of the credit determined each year allocated to officers and non-officer employees. I do know the total credit received for each year.

Either Innovation or the CPA firm is trying to claim that info is proprietary.

Anyone run in to this before?

Am I back to just reducing the wages in some other logical way?

[qbteachmt]

"Either Innovation or the CPA firm is trying to claim that info is proprietary."

Your client is their client. Your client submitted the raw data to that process and the forms were submitted on their behalf with their approvals. They should not accept that answer, because they are the responsible party in the eyes of the IRS, if there is an inquiry. The math is per the IRS. There is nothing proprietary about following regulations. Their system can be proprietary, but they should be able to provide shareholder/officer and/or nonqualified wage info relative to what was applied for.

If not, how do you know they didn't just throw a dart at the wall and submit that value?

[ctclarktx]

I have a question regarding reporting the ERC on an amended tax return.  I was initially thinking/reading that it was a credit that belonged on K-1 line 13 code P.  In reading this thread -- I see that it is a payroll tax credit and NOT an income tax credit and therefore doesn't belong on K-1 as a credit.

I know that I have to reduce the wages for the amount of the credit received in the period that the wages were paid/recorded.  My question deals more with the reporting -- on the refund letters from the IRS there is a "tax-decrease" and "credits-increase" and also the interest income portion.  I will be reporting the interest income in the period received.  Should the "tax-decrease" and "credits-increase" be added together and that amount be the wage reduction?  Or should the "tax-decrease" be listed as other income and reported in the same period as the interest income?