Are ERC credits taxable income (or reduce a loss)
ERC credits would be the first satisfying thing after the pandemic, but what government say about it?
The answer is yes when you ask are ERC credits taxable income. IRS Notice 2021-20 provides that an employer receiving an employee retention credit refund should not include the credit in gross income for federal income tax purposes; however, under rules similar to IRC Section 280C (which also applies to other tax credits, such as R&D credits), such employer should reduce their wage expense by such amount in 2020 and/or 2021, as applicable. If the company was in a taxable loss position greater than the amount of the credit, a reduction of wage expense may only reduce their loss position for such a year with no additional tax due because of the credit.
Permalink Submitted by William Tuttle on Fri, 2023-08-04 17:52
Yours is a general tax question off topic to the forum