lacerte tax

Forum|Forum|5 years ago
February 4, 2021
4 replies
37 views

Preparing an S Corp return with employee retention credit. My balance sheet is off by exactly the amount of the credit. What am I missing? I entered the ERC amount in the field labelled "Less employee retention credit claimed on the employment tax return". Not sure if it matters but the credit was an actual refund not just reduction in payroll tax deposit.

Also, how should I handle 4th quarter ERC that was claimed on the Form 941 but refund not yet received?

Thank you.

Lacerte Tax

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sjrcpa

Level 15

Which balance sheet account is wrong? Is there an M-1 adjustment for the ERC?

The more I know the more I don’t know.

A

aeh-cpaAuthor

Level 3

It's the retained earnings. Yes, there is an M-1 adjustment. The net income per books does not match QuickBooks balance sheet. It's off by the ERC.

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TaxMom12

Level 4

@aeh-cpa I'm experiencing the same issue. My net income per books on the M-1 Line 1 does not match. It's reduced by the credit. The only other solutions is to either reduce wages (don't want to do that, then wont tie to W3) or do another M-1 adjustment in addition to the specific sick and family credit input field.

Have you determined anything new since you posted this last week?

D

DME-CPA

Level 3

Has anyone figured out how to key this into Lacerte properly? Or is everyone just ignoring the box under Salaries and wages where you are supposed to enter the employee retention credit amount? I have the same problem many of you described in the 1120S module.

My client has wages of $487,000. Client is eligible for $25,000 ERTC, which we have amended 941 for. I recorded an entry to the books to debit a receivable and credit Salaries Expense. Now my books show total wages of $462,000. In Lacerte, I put $487,000 in the Salaries and wages box and $25,000 in the Less: employee retention credit box. Line 8 of 1120S correctly shows wages of $462,000. However, M-1 line 1 does not tie to book income. Instead of showing a loss of $160,000, it shows a loss of $185,000 because it isn't taking into consideration the fact that I have already reduced wages in the books by $25,000. Instead, it has an addback on line 3 for "Wages/Costs for Employment Credits" of $25,000.

What am I missing here? As others have said, if I ignore the box that says Less: employee retention credit and don't put anything there and instead just key $462,000 as Salaries and wages, then the numbers on the 1120S, Balance Sheet, and M-1 all make sense to me. So is Lacerte not handling this right, or am I missing an entry somewhere?

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aeh-cpaAuthor

Level 3

I just entered the reduced amount in Salaries and Wages box. I ignored the Less: ERC box.

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tk57_2

Level 2

Agree reduce the wage manually. I am still wondering about the timing? Anyone else have this question. There is no guidance. I think it should be done it on the 2020 return regardless of when the money comes from the IRS?

S

Stimey

Level 3

Once again, lacerte trying to be cute; the way the system handles these ERC - does not make ERC available for Income Distribution - Ignore this crap - on the salaries and wages input line - do a drop down ....and list gross salaries and the next line enter the ERC as a negative . At least this way - the system will print supporting documentation for the IRS.

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Acct007

Level 2

The problem with this is that it will mess around with anything related to the state that might be different. For example, in California, the wages offset by the ERTC are added back in on the CA return and reduces CA taxable income. This really is a major problem, I hope Lacerte gets it together.

KennethS

Level 3

Sorry I may have missed the service request back in February. It looks like our All Stars have handled the tax aspects wonderfully. On a technical note we do make an automatic adjustment on the M-1 as a default. This can be changed on a per return or all return basis. Per return we can override the adjustment in the balance sheet miscellaneous screen. The field is labeled Schedule M-1 adjustments for refundable employment tax return credits: 1=yes, 2=no [O]. An entry of 2 here would suppress the automatic adjustment on the M-1. To change this globally for all return go to settings then options. On the tax return tab then federal tax options there is a similar heading Schedule M-1 adjustments for refundable employment tax return credits. If the drop down is yes the M-1 adjustment will be made, if it is no the M-1 adjustment will not be automatic.