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Update: 2021 Reporting ERTC & Sick Leave Tax Credits on Tax Return [Employee Retention Tax Credit] - YouTube
Channel: JJ THE CPA
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jj the cpa here hope you're doing well
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so
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how and when do you report the employee
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retention tax credit and i'm going to
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just throw in here how do you also
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report and win
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uh the sick and family leave tax credits
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so the irs gives this
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the clear answer
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uh in the instructions
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for each of the forms that you would be
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filing where you would be looking at the
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definition of the deduction of taxes so
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for schedule c schedule f
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1120s 1065 11 20. if you look at the
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instructions which i'm going to give you
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links to
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and you look at the area that talks
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about the deduction of taxes so when
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you're looking through
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on the tax return and you see the
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deduction for taxes so this isn't
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looking at form 1040 instructions this
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isn't talking about employment taxes
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it's not talking about taxes related to
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income
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this is the deduction of taxes similar
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where you would be deducting
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the real estate taxes let's say or other
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taxes but when you look at that
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instructions this is where you find what
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i'm getting ready to tell you which is
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the employee retention tax credit is
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reported as a reduction
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of wages
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so whatever that wage amount is going to
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be as a deduction you reduce it down by
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whatever the employee retention tax
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credit is
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and the year in which you make that
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adjustment is the year in which the
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wages were deducted
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now for the family and sick leave it
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works differently and it's in the same
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spot that you'll find what i'm getting
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ready to tell you meaning in the
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instructions of any of these forms on
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how do you deduct
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taxes is where it also indicates this
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same thing which is the sick and family
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leave credits
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are reported actually as other income so
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each one of these forms has a line item
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that says other income so on schedule c
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schedule f 11 20 s 10 65 11 20 you're
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always going to see
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on page one of any of those a line item
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that says other income that's where you
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report that tax credit for the family
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and sick leave credits and you will also
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report that as other income in the year
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in which the wages were deducted that
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were then used to achieve the credit it
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does seem a little unfair because
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many didn't know that they could get the
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credit or they're going to discover
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later that they can get the credit but
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the irs did indicate i'm going to give
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you the irs notice that goes through
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this and i'll let indicate the page
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number of that irs notice in the body of
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this video where
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the irs indicates that you must report
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it in the year in which the wages were
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deducted so that reduction of wages
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if the wages were deducted in 21 but
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then those wages were
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used to get the employee retention tax
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credit
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then even if you haven't received the
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actual credit yet or the check you
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haven't even filed the 941x yet whatever
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the case is
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that adjustment though still needs to be
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made on 21 even though you may be filing
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for it or getting your money if you will
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your check in 2022. irs doesn't care
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what they indicate is what was the year
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that you deducted the wages that were
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used to achieve the credit then that is
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the year in which you would reduce the
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wages and then it's the same concept
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with the family and sick leave credits
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which is
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what year were the wages deducted that
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those wages were used to achieve a
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family or sick leave credit then that is
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the year in which the other income would
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be reported and the irs indicates that
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you may need to file an amended return
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now for fellow tax pros remember the
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rules related to amended returns which
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is in a separate category and they've
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always been around how you can take care
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of an amended return but that's for
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fellow tax bros and you'll just need to
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rely on your experience on how to take
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uh how you approach uh amended returns
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so hopefully that's helpful for you i'm
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gonna give you the links to this as well
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all right hey thanks for tuning in i'd
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love it if you'd subscribed and then
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don't you ever forget you've never met a
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cpa quite like me have a great one
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[Music]
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[Music]
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cpa quite like kk
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