ERC refund? When to reduce the deduction for wages

The employee retention credit (ERC) ended in 2021, but refunds may still be available for employers that failed to claim it then but can do so now on an amended Form 941 (employment tax return). The ERC, even though it is an employment tax credit, does not reduce the income tax deduction for the employer’s share of Social Security and Medicare taxes; it reduces the income tax deduction for qualified wages. The IRS says the timing of the reduction in the employer’s deduction occurs in the tax year in which the qualified wages were paid or incurred, not the year the ERC is received. Translation: An amended income tax return is required for the year in which the wages were paid. #IdeaoftheDay