The ERC credit is not to be considered taxable income for federal income tax purposes.
The ERC itself is not taxable income. As an employer, if you receive the ERC, you do not have to include it as income on your tax return. It is important to note that the ERC is specifically designed as a tax credit, not a taxable income.
Understanding the Taxability of ERC
It is important to remember that your business must reduce any deductible wage expenses by the amount of the ERC credit you receive, to avoid ‘double-dipping’. If you have already claimed deductions or tax credits for the same expenses used to calculate the ERC, you cannot claim those expenses again for another benefit. Be cautious to prevent duplicating tax benefits.
To ensure accurate reporting and maximize the benefits of the ERC, seek guidance from a qualified tax professional or advisor. They can provide personalized advice based on your specific situation and keep you informed about any updates or changes to tax regulations.
- Internal Revenue Service (IRS)
- The CARES Act
- American Institute of CPAs
- Employee Retention Tax Credit: What You Need to Know
U.S. Department of the Treasury