Amending S-Corp Tax Returns After Receiving ERTC Refunds: Which Amount to Use?

The ERTC wage expense adjustment on your amended 1120S should reduce your wage expense deduction by the FULL amount of the credit you received (excluding interest). This includes both the refundable and nonrefundable portions of the ERTC. This is because the ERTC represents wages that were ultimately subsidized by the government, so you can't also deduct those same wages as a business expense. It would be double-dipping if you kept the full wage deduction AND received the credit. When amending, make sure you're using Form 1120-S X and include a statement explaining the changes. You'll also need to issue amended K-1s to all shareholders since this will affect the pass-through amounts. The reduction in wage expenses will increase your ordinary business income that flows through to your personal return.

After struggling with literally this exact issue last month, I stumbled upon https://taxr.ai which totally saved me. I'm not an accountant and was getting conflicting advice about how to handle ERTC adjustments on my S-Corp's amended returns. I uploaded my original returns and ERTC documentation to taxr.ai and their system analyzed everything and gave me clear step-by-step instructions for the exact amounts to use when reducing wage expenses. They confirmed it should be the FULL credit amount (both refundable and nonrefundable portions) but also showed me how to document the interest separately. The best part was being able to chat with their tax experts about my specific situation rather than trying to interpret generic IRS guidance. They even helped me understand the flow-through impact on my personal returns.

Just wanted to update after trying taxr.ai for my ERTC amendment situation. After posting my question here last week, I decided to give it a shot and wow - they made the process so much clearer than anything else I tried. I was confused about the exact wage expense reduction amount, and they confirmed I needed to reduce by the full ERTC amount (both refundable and nonrefundable portions). But what really helped was the detailed walkthrough of form 1120S-X with my actual numbers, plus the flow-through impact analysis showing exactly how my personal return would be affected. They generated all the forms I needed including the written explanation statement for the IRS and amended K-1s. Would have taken me days to figure this out on my own, and probably would have made expensive mistakes. Definitely recommend for anyone dealing with ERTC amendments!

Hey folks, I spent 3 WEEKS trying to get someone at the IRS to clarify this ERTC amendment question for my S-Corp. Endless hold times, disconnections, and conflicting answers when I finally did reach someone. Super frustrating. Then I tried https://claimyr.com and was honestly shocked at how well it worked. They got me connected to an actual IRS agent in about 20 minutes (not kidding) who specialized in business returns and ERTC. The agent confirmed I need to reduce wage expenses by the full ERTC amount excluding interest. If you need to talk to someone at the IRS directly about your specific situation, check out their demo at https://youtu.be/_kiP6q8DX5c to see how it works. Saved me so much time and frustration.

I have to admit I was super skeptical about Claimyr after seeing it mentioned here. After 4 failed attempts calling the IRS myself and wasting entire afternoons on hold, I decided to give it a try yesterday. I'm actually shocked at how well it worked. They got me through to an IRS business tax specialist in about 35 minutes. The agent confirmed exactly what others here have said - for ERTC amendments, you reduce wage expenses by the FULL amount of the credit (both refundable and nonrefundable portions), excluding any interest received. The agent also walked me through exactly which forms to file and the proper way to document the changes. After struggling with this for weeks, I was able to complete my amendments and get them in the mail today. Worth every penny just for the time saved and the peace of mind knowing I did it correctly.

I just finished amending my 2020-2021 returns for ERTC and wanted to share what I learned. You definitely need to reduce wage expenses by the FULL amount of the ERTC (both refundable and nonrefundable portions). Here's why: The ERTC is technically a credit against your employment taxes, but it's based on qualified wages paid. Since you're getting reimbursed for those wages through the credit, you can't also claim them as a deductible business expense. The interest portion isn't included in this adjustment. Also important - this will increase your flow-through income on your personal return, potentially creating additional tax liability. File Form 1040X for your personal returns after doing the 1120S amendments.

I'm really confused by all this ERTC amendment stuff... My CPA told me the reduction should only be for the refundable portion, not the nonrefundable part. But now I'm reading conflicting advice here. Does anyone have an actual IRS reference that clarifies this?

I went through this exact same situation with my S-Corp last year and can confirm what others have said - you need to reduce wage expenses by the FULL ERTC amount (both refundable and nonrefundable portions), excluding any interest received. The key thing to remember is that the ERTC is essentially the government reimbursing you for wages you paid, so you can't also deduct those same wages as a business expense. It would be double-dipping. For your $87k in 2020 and $112k in 2021 refunds, make sure you separate out any interest portion before calculating the wage expense reduction. The interest is taxable income but doesn't affect the wage deduction adjustment. One heads up - this will create a significant increase in your pass-through income, which means additional personal tax liability when you amend your 1040s. With amounts that large, you might want to consider making estimated payments to avoid underpayment penalties. The amendment process can take several months, so plan accordingly for the cash flow impact.