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Employee retention Credit

robtaxman
Level 1

Where does the employee retention credit get entered?

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qbteachmt
Level 15

"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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dkh
Level 12

More info please.....   for company that paid ERC wages or for employee that received ERC wages  ?   or for the actual credit allowed on Form941  ?    

 

robtaxman
Level 1

Should have mentioned that. It is for an 1120S return. The corp took the credit on their 941 for the ERC wages paid.  

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qbteachmt
Level 15

https://proconnect.intuit.com/community/taxation/help/entering-the-employee-retention-credit/00/1217...

 

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robtaxman
Level 1

That link does not explain where to enter the ERC on the 1120S.

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dkh
Level 12

If you look at the Sched C,E,F lines noted in the Link...... each line is the Wages line for that form.   That line on the form says to enter wages less employment credits.    So the same should apply on Form 1120S.  In fact Form 1120S, page 1, line 8  say Salaries and wages less employment credits.  The Smart Worksheet for Line 8 has line F to enter "Other credits".    If you report wages on Form 1125-A = Cost of labor,  I would follow the same guidance as line 8 from page 1.

Hope this helps.

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robtaxman
Level 1

This credit is for officer wages and sch 1125-E doesn't have a place to enter the credits.

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qbteachmt
Level 15

"That link does not explain where to enter the ERC on the 1120S."

Because that answer is found from the IRS instructions:

https://www.irs.gov/pub/irs-pdf/i1120s.pdf

You use the program to do what the IRS tells you is needed.

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robtaxman
Level 1

I don't see where the instructions refer to the CARES act ERC. The instructions talk about the ERC as a K-1 line 13g code P entry but this credit is not a pass thru credit as it reduced the payroll taxes paid for each quarter it applied.

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robtaxman
Level 1

I see where 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.

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dkh
Level 12

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.      

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qbteachmt
Level 15

"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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View solution in original post

I agree these replies lead to no real solutions and if some one instructs me to read instructions again I will pop my eyes out!!! It is clear that with all the revisions on forms and instructions and fact no one seems too have followed their own guidance and actually got these credits, one could rant that these are not solutions amongst professionals but cut throat comments to belittle and undermine each other instead of help us to help others.  Vultures of Culture Please read these INSTRUCTIONS and understand them before application:

BE KIND and helpful towards others( they are here seeking answers too) in ways to motivate and encourage more productive lines of communicating, problem solving, use your words to aid in our search for the correct and easy to share methods to fix this issue.    while rafting through the murky waters around the ERC,  I am trying to help others and use this forum for good and only invite  positive and resourceful attitudes while using it. Adopt the same energy and maybe a actual solutions on the topic and how to enter the details will emerge. These instructions will self destruct upon completion CABOOM>Good luck to you all as I am still seeking outside resourced info from those who look to offer solutions as they apply to helping us all, not just those who are more literate, less sleepy, or whom need to be "RIGHT". Remember these are credits to help taxpayers but they may be too complex and under practiced to implement without audits...

what if you did not prepare the original report and you are enlisted to amend it?  That's my situation  so defiantly none the these solutions is truly that. MY  client s-corp with 16 employees used square to file original reports, no wksht 1 used at all. Now calculating and entering these details is 10 hours in and I do not know what to do next.  Good luck to you and don't worry I agree these are terribly not helpful instructions given.

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qbteachmt
Level 15

What does this mean? "MY client s-corp with 16 employees used square to file original reports,"

What Report is this, and why does Square come into it? The ERC is a Payroll issue, requires a Payroll Form, not a report, and is filed with the Feds.

"and if some one instructs me to read instructions again I will pop my eyes out!"

Then start popping. Even you point out the changes mean you want to refer to current materials. That's what the IRS website provides. This is an income tax preparation forum for using ProSeries. If you are preparing a tax form, that form's instructions are your best reference for current instructions.

"and fact no one seems too have followed their own guidance and actually got these credits"

That's a pretty broad comment. You are posting in a topic that is 5 months old.

"what if you did not prepare the original report and you are enlisted to amend it?"

There is no Report. There are Forms with form numbers. 7200? 941? 941X?

This topic explains very specifically that the Credit is reducing the Wage Expense you are trying to claim on income taxes for the employer. You used that wage to claim the credit; it proves you qualify for the credit. Now you show this is what you did by not also trying to deduct that wage amount as an expense, because you already got credit for it.

I can't figure out if you need help with ProSeries, or with IRS instructions, or amending payroll. This is ProSeries forum for using ProSeries. Are you sure you are even in the right place on the internet?

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Ajay1
Level 1

ProSeries expert could not help me today.  I was referred to read to this message thread but this refers to 1120S and not 1120 for which I was seeking help.  My problem on 1120:

On 1120 (not 1120S) when I enter Employee retention reduction amount under Salaries and Wages line 13G then amount flows and automatically gets populated on Schedule M-1-Line 5 with description as "Employment credits wage reduction", however, now it gives me error on M-1 as line 10 of M-1 does not match with 1120-Line 28.

My total income on M-1 Line 7 on this return matches but with the above error.  If I also add the same amount on M-1 Line 7 then error goes away but then it does not match with my books.

It seems that ProSeries is not populating amount from 1120 to M-1 correctly or I am missing something.

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