EE Retention Credit

Technical topics regarding tax preparation.
#1
Taxctfl  
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I am thinking this credit is too good to be true and trying to make sure a client is eligible. I found #2 below from https://www.irs.gov/newsroom/covid-19-r ... ation-faqs

2. Who is an Eligible Employer? (updated November 16, 2020)
Eligible Employers for the purposes of the Employee Retention Credit are employers that carry on a trade or business during calendar year 2020, including tax-exempt organizations, that either:

-Fully or partially suspend operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or
-Experience a significant decline in gross receipts during the calendar quarter.

My question is - do the above parameters apply to the changes for 1st and 2nd quarter 2021?

For example, client was never considered non-essential and therefore not shut down. However, they did experience a decline in gross receipts of > 20% when comparing 1st quarter 2019 to 1st quarter 2021. Because of the word OR above, it seems as though they would be eligible because they experienced a decline in receipts. Is that correct?
 

#2
sjrcpa  
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You are correct. It is one OR the other.
 

#3
AnitaL  
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Wilmington, NC
What if the corporate return was already filed when you realized the taxpayer was eligible for the ERC?
Can you amend the return and claim the ERC?
 

#4
lckent  
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You would have to amend the 941 to claim the credit and amend the 1120 to report the reduction of expenses.
CPA, Retired
 

#5
AnitaL  
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149
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Thank you! Just wanted to be sure I could amend the 1120S for that credit.
 

#6
ocdtax  
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16-Feb-2021 4:37pm
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FL
You'd claim the credit by filing a corrected Form 941 for the quarter. You'd then amend the 1120S because you have to reduce the expense by the credit you received.
 


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