HOW TO ENTER INTEREST PAID FROM THE IRS ERTC CREDIT

Forum|Forum|2 years ago
March 26, 2024
3 replies
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How do you enter the interest paid by the IRS on funds received from the ERTC credit?

Tax Advice

Best answer by DianeW777

Yes. The amount of your ERC reduces the amount that you are allowed to report as wage expense on your income tax return for the tax year in which the qualified wages were paid or incurred.

Generally, most taxpayers claim wage expense as a deduction on their income tax returns. However, for some taxpayers, wage expense is properly capitalized to the basis of a particular asset or as an inventory cost.

You should amend your income tax return to reduce the amount of your original wage expense if that adjustment has not yet been made by:

reducing the prior wage deduction, or
reducing the prior amount capitalized (and making any resulting adjustment, such as reducing a depreciation deduction).
- Question 7 - IRS ERC FAQs

@MARK2025

Vanessa A

You can enter the interest by clicking the following:

Federal
Income
Show more next to Interest and Dividends
Start next to interest on 1099-INT

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MARK2025Author

Thanks! Forgot to add that the interest amount was reported on a letter from the IRS not a 1099 INT form. Would the same apply?

MayaD

Yes, enter the amount received as if it was reported on a 1099-INT.

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VolvoGirl

Employee

Enter interest from the IRS like a 1099Int and put the amount in box 1. Enter it manually and just enter IRS for the payer. Don't enter any other info like the address or a EIN.

Enter a 1099-Int under

Federal on left

Wages & Income

Interest and Dividends

Interest on 1099INT - Click the Start or Revisit button

MARK2025Author

All great info! My final question is regarding the ERTC credit. The credit received should be deducted from the total employee wages that I have paid for that tax year correct? My understanding is that as a result of receiving the credit the deduction for wages is reduced as a result. Thanks.

DianeW777Answer

Yes. The amount of your ERC reduces the amount that you are allowed to report as wage expense on your income tax return for the tax year in which the qualified wages were paid or incurred.

You should amend your income tax return to reduce the amount of your original wage expense if that adjustment has not yet been made by:

reducing the prior wage deduction, or
reducing the prior amount capitalized (and making any resulting adjustment, such as reducing a depreciation deduction).
- Question 7 - IRS ERC FAQs

@MARK2025

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MARK2025Author

Thank you. I received the credit for 2020 and 2021 so I assume those would be the years I would need to reduce and amend correct? Can I amend using Turbo Tax for those years?