ERC REFUND - 2020 and 2021 Tax Return Amendments

Thoughts... You may be out of the statute of limitations for filing an amended individual return for 2020 (unless the original individual return was filed late). If you filed amended 1120S returns for 2020 and 2021, the S Corp K1s will not match what the individuals reported on the 1040 for 2020 and 2021, creating a variance issue. If it were me, I would amend the 2023 individual return to report the ERC refund as taxable income in the year the ERC refund was received (2023).  On the amended return, I would put a detailed explanation similar to what you stated above: explaining 2020 and 2021 S Corp returns were amended; 2020 and 2021 individual returns were not amended; 2020 most likely out of statute of limitations; received ERC refund in 2023 etc. Someone might have a different suggestion but this is how I would handle it. I'm confident it's the most efficient way to correct the error (client should have amended individual returns as soon as they amended the S Corp returns - they go hand in hand).

Clarification: may be out of statute of limitations for filing 2021 unless filed late (obviously out of SOL for 2020).