ERC funds
Jan Beatty
I am receiving the refund from the Department of Treasury for the adjusted 941 covered by the Employee Retention Credit. I need to be sure my thinking is correct. I am going to deposit them to my bank account and credit the payroll tax account for the amount refunded and the interest portion to interest income.
Will someone please confirm that my thinking is correct.
Jan Beatty, EA
Bridge Street Tax Service & Bookkeeping, Inc.
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Visalia, CA 93277
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Matthew Bigelow
Jan, the interest is current year income but for federal tax purposes, you will need to treat the ERC as a reduction of deductible payroll for the year to which the credit applies. If a tax return has already been filed for the year in question, you will need to amend the return.
For bookkeeping purposes, I would simply treat the ERC as “Other Income” in the year of receipt and leave the payroll tax account alone.
Matthew Bigelow, E.A.
JLZ Business Services, Inc.
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Jan Beatty
Thank you, Matthew. That means I will have to amend my personal return as well as my business is an S-Corp.
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