ERC Wage credit

[spanel]

A couple items... I have not done an ERC personally.. all of my business clients did not meet the qualifications.

I have a potential client that just applied for the ERC in April 2022 for $48k. He has not received this as of yet.

The tax preparer took his 2021 wages ($100k) and reduced it by the $48k ERC that was applied for in 2022 and filed a return with the $48k reduction in wages, therefor this client owes big $$.

Is this normal, being that the client has not received or even been approved for this to have to reduce his 2021 expenses?

Thanks!!

Chris

[TaxGuyBill]

Yes, that seems reasonable. Assuming the ERC is approved, the wages need to be reduced for 2021 (regardless of when the ERC was applied for or received).

I suppose they could have filed with the full wage deduction, then once the ERC was approved they could amend to reduce the wages. But assuming the ERC will be approved, doing it this way saves the need to amend. Assuming things were done correctly, there really isn't a reason why ERC should not be approved and received.