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1120s with Employee Retention Credit

JN3895
Level 2

I have a S corp with the employee retention credit. I entered the credit in Lacerte Screen 15 Ordinary Deductions "Less: employee retention credit". It is reducing the wage expense on page 1, line 8. But it is also coming in on page 3 Schedule K as a non-deductible expense. Therefore, the Balance Sheet shows Retained Earnings is reduced again. The net effect is like the credit is reducing income twice. What am I missing?

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ricklang99
Level 2

I haven't filed the return yet, but as of now I'm NOT entering it on the line in Lacerte for 'Less retention credit...' but instead reporting it on a separate line as a reduction of 'Salaries and Wages.' This avoids any M-1 adjustment.

Like you, I feel I'm missing something with this workaround and was hoping somebody would post a different solution.

 

 

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