ERC Tax Credits

[Roz1]

If an ERC credit is for a payroll quarter of year 2020; we are supposed to go back to that year and file amended tax returns as we have to deduct the amount of the credit from the payroll tax expense.  For an S Corp and LLC's we would have to also amend personal returns.

Is it possible to input the deduction in the year the credit is received?  Is this taking a high risk w/IRS?

[Just-Lisa-Now-]

Yes, you have to amend.  Yes, it will draw attention.  Yes, ERC credits are one of the IRS dirty dozen fraudulent credits out there right now, so yes, be sure your clients really do qualify before taking this credit, you should expect for them to be scrutinized.

[Roz1]

Thank you!

Yes, the company issuing the ERC credits for my clients is excellent, although very expensive.

So tempted to include the credits in the year received.  

Thank you again.

[qbteachmt]

"So tempted to include the credits in the year received."

Yes, that's why you will be amending. Credit in the time periods where the credit applies, based on applying for the credit using those wages in those periods.

You seem to want to include in the year the funds are received. That's placing a red flag on the filing, because the IRS certainly knows which periods are qualified for eligibility. And that's not likely the same period the funds are paid out.

[TaxGuyBill]

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@Roz1 wrote:

So tempted to include the credits in the year received.  

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That is not an option.  It doesn't really matter what "risk" it is with the IRS, it is not allowed.

[Roz1]

Thank you!!

Biting the bullet.