I have an SCorp with 1 member and 2 additional family members on payroll. Total wages for 2023 for all 3 was $107k. If they elect to do a SEP (no current retirement plan in place) with 25% match of compensation, they could end up with almost a $28k credit?
So if an S-corp started a 401K in 2022 and has 4 eligible employees including the sole shareholder in both 2022 and 2023, but only the shareholder chose to participate in 2023, then the company would potentially qualify for up to $250 x 3 =$750 of §45E(e) startup expense credit.
Then, if the shareholder has Medicare wages of less than $100K for 2023 the company would qualify for up to $1,000 (because it is the second year of the plan) of §45E(f) contribution credit.
Am I interpreting this correctly? This article is extremely helpful and illuminating!
Great article Tom! Does the credit under 45(E)(f) require that the business owner have at least 1 non-owner working for the business or can a business owner with no employees claim the credit? There isn't a lot of guidance out yet, but with the references, it sounds like a business owner with no employees could qualify. (The credit for the startup costs, however, is different). Thank you for your thoughts!
I have an SCorp with 1 member and 2 additional family members on payroll. Total wages for 2023 for all 3 was $107k. If they elect to do a SEP (no current retirement plan in place) with 25% match of compensation, they could end up with almost a $28k credit?
So if an S-corp started a 401K in 2022 and has 4 eligible employees including the sole shareholder in both 2022 and 2023, but only the shareholder chose to participate in 2023, then the company would potentially qualify for up to $250 x 3 =$750 of §45E(e) startup expense credit.
Then, if the shareholder has Medicare wages of less than $100K for 2023 the company would qualify for up to $1,000 (because it is the second year of the plan) of §45E(f) contribution credit.
Am I interpreting this correctly? This article is extremely helpful and illuminating!
Great article Tom! Does the credit under 45(E)(f) require that the business owner have at least 1 non-owner working for the business or can a business owner with no employees claim the credit? There isn't a lot of guidance out yet, but with the references, it sounds like a business owner with no employees could qualify. (The credit for the startup costs, however, is different). Thank you for your thoughts!