Do I need to amend 2020 return if I finally received ERTC after 3 year audit window closed?

You should definitely file an amended return. The IRS generally has 3 years from the date you filed to audit your return, but receiving the ERTC now creates a new tax situation that needs to be reported properly regardless of the audit timeframe. For your business return (1120-S for S-Corps), you'll need to file an amended return (Form 1120-X) to reflect the ERTC received. This will generate a revised K-1 that flows through to your personal return. For your personal return, you'll need to file a Form 1040-X to report the additional income from the revised K-1. Even though you're outside the normal 3-year window, you still have an obligation to report all income. While filing these amendments doesn't automatically reset the entire 3-year audit window for everything on your original returns, it does open up the amended items to potential review. The IRS could examine the specific items related to the amendment.

I went through something similar with a delayed ERTC payment for my retail business. I tried making sense of all the IRS guidance and conflicting advice online, but was getting nowhere. I finally used https://taxr.ai which helped me understand exactly what to do with my amended returns. They analyzed my specific situation and explained how the ERTC affects both my business and personal returns. Their system even helped me understand the impact on my state returns, which I hadn't even considered. The guidance was specifically tailored to my S-corp situation with the ERTC coming years after the original filing, just like yours. I was worried about triggering audits by filing amendments, but they provided clear explanations about the statute of limitations implications.

I was super skeptical when I first heard about taxr.ai from this thread, but I decided to try it for my similar ERTC situation. I have to say, I was impressed with how it handled the complexity of my pass-through entity situation. It analyzed my previous returns and showed me exactly how the late ERTC receipt affects both my business and personal taxes. It explained the wage expense reduction rules that I wasn't aware of at all! The amended return guidance was really specific to my exact situation - not just generic advice. If you're dealing with ERTC amendments beyond the normal audit period, definitely worth checking out.

I had the exact same situation except with my PPP loan forgiveness that came super late. After weeks of trying to call the IRS for clarity about the amendment requirements and getting nowhere, I used https://claimyr.com and was able to actually speak with an IRS agent within 30 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed I needed to file amended returns despite being outside the normal 3-year window, and explained exactly which forms to use for my situation. They also confirmed that the amendment only opens up the specific amended items to audit, not the entire return. Saved me weeks of stress trying to get through to someone at the IRS.

Alright, I need to eat some humble pie here. After calling out that Claimyr service as BS, I was still desperate to talk to the IRS about my own ERTC situation from 2021, so I actually tried it. And... it worked exactly as described. Got connected to an IRS agent in about 45 minutes without me having to sit on hold. The agent confirmed that yes, I needed to amend both returns even outside the normal examination period, and explained that only the amended items would be subject to potential review. Saved me tons of anxiety and uncertainty. Sometimes I'm too quick to assume something's a scam.

Dealing with similar ERTC issues here. My accountant told me that there's a specific procedure for filing these amended returns when outside the normal time window. Apparently you need to include a statement explaining the reason for the late amendment (in this case, the delayed ERTC payment). She also mentioned that this is becoming a common issue since the IRS is still processing ERTC claims from years ago.

random thought but i just realized if ur getting the ERTC now for 2020, the statute of limitations for the IRS to claim it back might not have even STARTED yet lol. usually its 3 yrs from filing but for refunds/credits it can be different. my tax guy told me that for some credits the clock starts ticking from when u receive the $$ not from when u filed originally... just something to consider

This is such a timely discussion - I'm dealing with almost the exact same situation! Got my ERTC for 2020 just last month after what felt like an eternity of waiting. One thing I learned from my CPA is that even though we're past the normal 3-year audit window, the IRS still expects proper reporting of all income and credits. The key insight here is that the ERTC creates a "subsequent event" that requires amendment regardless of timing. For S-Corps specifically, the flow-through implications are crucial. You'll need to amend the 1120-S first to reflect the reduced wage expenses (since ERTC reduces your wage deduction), which will generate a corrected K-1. Then use that corrected K-1 to amend your personal 1040. What really helped me was understanding that this isn't about whether you're "safe" from audits due to timing - it's about compliance. The IRS has been pretty clear that ERTC recipients need to properly report these transactions when received, even if it's years later. Also worth noting: some states have different rules about how they treat ERTC, so definitely check your state requirements too. In my state, the reduced federal wage deduction flowed through and required a state amendment as well.

This thread has been incredibly helpful - I'm in a similar boat with my ERTC finally coming through for 2020! One thing I want to add that hasn't been mentioned yet: if you're using a tax professional for the amendments, make sure they're familiar with the specific ERTC reporting requirements. I initially went to my regular tax preparer who admitted they weren't up to speed on the latest ERTC amendment procedures since it's been such a moving target with all the delays and changes. I ended up switching to someone who specializes in business tax credits and it made a huge difference in understanding exactly what needed to be reported and how. Also, keep really detailed records of when you received the ERTC payment and any correspondence from the IRS about it. From what I understand, this documentation could be important if there are ever questions about the timing of your amendment. The whole situation is unusual enough that good documentation seems extra important. Sean, definitely don't ignore this just because you're outside the normal window - everything I've read suggests that proper reporting is still required regardless of timing!