How to Report ERTC on 1120S?

To report the Employee Retention Tax Credit (ERTC) on Form 1120S, eligible S corporations must complete line 13g, which is labeled "Other Credits"[1]. Here are some important steps to follow when reporting the ERTC on Form 1120S:

1. Determine Eligibility: To claim the ERTC, eligible employers must have experienced a significant decline in gross receipts or a full or partial suspension of operations due to government orders related to COVID-19[2][3][4][5][6]. S corporations should ensure they meet the eligibility criteria before claiming the credit.
2. Calculate Qualified Wages: The ERTC is based on qualified employee wages during the eligible period. For employers with more than 500 full-time employees, qualified wages are limited to wages paid to employees not providing services due to a full or partial suspension of operations or a significant decline in gross receipts[4][5]. S corporations should ensure that they have accurate records of qualified wages paid during the eligible period to claim the credit correctly.
3. Complete Form 5884-C: To claim the ERTC, eligible S corporations should use Form 5884-C, the form specifically designed for claiming the ERTC[1]. This form will help you calculate the amount of the credit and determine the appropriate line to report it on.
4. Report on Line 13g: On Form 1120S, the ERTC should be reported on line 13g, which is labeled "Other Credits"[1]. In the space provided, you must enter the amount of the credit you are claiming.

It's important to note that the ERTC has undergone updates and changes since its introduction. S corporations should stay updated with the latest IRS guidance and consult with tax professionals to ensure compliance with eligibility requirements and maximize the benefits of the credit[1][4][5][6].

In conclusion, eligible S corporations can report the Employee Retention Tax Credit (ERTC) on Form 1120S by completing Form 5884-C and reporting the credit on line 13g. By understanding the reporting requirements and staying informed about IRS guidelines, eligible S corporations can use this financial incentive to retain their employees during challenging economic times.