| Unforeseen PPP tax implications |
| | Good morning,
Tax time is confusing and stressful under the best of circumstances. It could be even worse if you've taken out a loan from the Small Business Administration's Paycheck Protection Program.
The tax status of the PPP has been muddled from the beginning. These forgivable loans were never meant to be taxed as income. But under the Trump administration, the Treasury department and the Internal Revenue Service held that business owners couldn’t deduct expenses that were paid for with PPP. Congress disagreed, and in December 2020 put its position into law with the Consolidated Appropriations Act, which also contained a $900 billion relief package.
Unfortunately, that doesn't quite settle the issue. Right now, 19 states tax forgiven PPP loans, by either including them as taxable income or disallowing deductions for business expenses made with the loans, says Katherine Loughead, senior policy analyst for the Tax Foundation. And even if those states change their policies soon, you might not like the outcome.
Read our story to learn whether you live in one of these 19 states--and if so, what to do about it. |
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