Jump to content
ATX Community

1120S, Employee Retention Credit Reporting


G2R
 Share

Recommended Posts

Wow, this tax season feel like college.  I have to learn something new every week!

1120S, 2 owners.  Both on payroll, no other employees.  They filed for the ERC in Q3 for $5000.  I just want to confirm I'm reporting this credit accurately. 

  • 1120S, pg 1, line 7:  Reduced the owner wages by $5k.
  • Sch K, line 13g, code P: $5,000 (which prompts form 5884-A to open)
  • Form 5884-A, line 3: $5,000

Does this look right?

What I really hate about this approach is that the 1120S wages won't match the W-3.   But I guess that's what the 5884 reconciles out.  Also, if the IRS uses line 7 as a trigger for unreasonable compensation, this might trip it.  

Link to comment
Share on other sites

28 minutes ago, cbslee said:

You need to look at Monday's thread about this under the COVID 19 SECTION

I assume you mean this one.... If so, this yes I had read that already. Your IRS FAQs you posted match the above approach.  

Still looking to see if others preparers that file 1120S are handling this on their returns the same way.  

 

Link to comment
Share on other sites

  • 1 month later...

From what I understand this is not a Income Tax Credit reported on a K-1. It is a credit on 941 Taxes. So it does not go as a Code P on Schedule K

Line 13g code P specifically states: "Other credits (code P). Attach a statement to Form 1120-S that identifies the type and amount of any other credits not reported elsewhere."

rom the 1120S instructions:

"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)."

Link to comment
Share on other sites

  • 5 months later...

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...