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Employee retention Credit

Level 1

Where does the employee retention credit get entered?

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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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Level 9

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

 

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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Level 15

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

 

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Level 1

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

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Level 9

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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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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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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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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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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Level 9

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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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.

*******************************
"Level Up" is a gaming function, not a real life function.

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