it’s December 1st we’re doing a ton of tax planning for our business clients. One of the things that comes up every single time is the forgiveness of the ppp loan.
Back in April-May- June the government was giving out ppp loans based off your prior year’s payroll.
As long as you had the expenses to offset it over a period of 24 weeks those loans are going to be forgiven. There’s certain ramifications and those type of things, but we’re not going to talk about that here right now.
What we’re talking about here right now is the aspect of the taxation of the ppp loan forgiveness. it’s one of the things that not a lot of people realized but when they got these loans. They got the money and they used it to pay their employees, or pay their rent, or the things that maybe would have gone unpaid without this.
That money is going to be is going to be taxable the IRS has said that the expenses used to forgive the loan. The expenses that you paid that were
used to offset the loan and get it forgiven are non-deductible.
So, if you had a thirty thousand dollar loan and you had thirty thousand dollars worth of expenses to offset it that thirty k is not going to be expensed. Essentially meaning you have a thirty thousand dollar increase in your taxable income.
This is hitting a lot of business owners right now and they were unprepared for it. So, the only thing that i can recommend is that you get with your CPA, you get with your tax advisor, and you do some tax planning. Figure out where you’re going to come out in this. to make sure that you’re not hit with an unexpected tax bill, due to government funding of a ppp loan in april of this year.
Have a great day and let us know if you need any help.