PPP Loans Officially Non-Taxable

The second stimulus package, passed by Congress on December 21st, clarified that the forgiven amount of a PPP loan will not be included as taxable income and any expenses used to have PPP loan forgiven can still be claimed as tax deductible expenses. The IRS had challenged this after the passing of the first stimulus bill, but Congress squashed the IRS’s stance with the passing of the second bill. This is a huge win for small business owners.

“The goal of this loan is to provide aide to businesses struggling during COIVD-19 and not to create a tax burden for those receiving the funds.”

For businesses who received the second round of PPP loans, the eligible expenses have expanded. Originally, at least 60% of the loan needed to be spent on payroll, leaving the remaining amount available for rent, utilities, and the interest portion of any mortgage payments. Now, those expenses also include, operation expenditures, property damage costs, supplier costs, and worker protection expenditures.

For more information on this or any other business or tax topics contact us here at Peachtree CPA Group, LLC in Peachtree city, GA.