Are PPP & SBA EIDL Loan Funds Taxable Income? PPP & EIDL Tax Implications
Many small business owners question if the PPP Loan and SBA EIDL Loan Funds they got are taxable income. In this video we answer the question, “Is PPP or EIDL Loan funds taxable income? This video is important so you do not overpay taxes on your PPP or EIDL Loan funds. Many business owners will be happy to know that ppp is not taxable and eidl is not taxable.
This video is intended for educational purposes and should not be taken as legal, financial or tax advice. You should consult with a professional about your unique situation before acting on anything discussed in these videos. Freedomtax Accounting and Multiservices Inc., Freedom Insurance Financial Inc., Freedom Realty Source Inc., and Freedom Immigration International Inc. are providing educational content to help small business owners and individuals become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience. Freedomtax Accounting and Multiservices Inc., Freedom Insurance Financial Inc., Freedom Realty Source Inc., and Freedom Immigration International Inc. or its members cannot be held liable for any use or misuse of this content.
If you received a PPP Loan or SBA EIDL loan in 2021, watch this video before you file your 2021 tax return, so you don’t overpay in taxes. That’s what we’re going to talk about in this video.
Hello from FreedomTax Accounting. We’re an accounting firm where we have been providing quality tax and accounting services now for over 20 years. In this channel we provide strategies for small business owners, so they can achieve their financial goals.
Now, for the last couple of months, basically since mid-2020, we have been providing many consultations to small business owners concerning their PPP and their EIDL loans. One of the most common mistakes that we have seen, this year and last year concerning tax planning with a PPP loan and EIDL loan, is that many business owners make the mistake of thinking that their PPP loan funds, and their SBA ideal loan funds, are income towards their business, and it is not. The PPP loan, the funds that you got from the PPP loan in 2021, and the funds that you got from the SBA ideal loan in 2021, are not considered business income. It’s a liability towards the business
Now, what’s happening is that early on in the PPP loan program, when it started, when the PPP started, the rule said that if you got your PPP loan forgiven, then you could not deduct the expenses paid with the PPP loan. So, in a sense it is taxable income. But what’s happening is, if you Google if PPP loan is taxable, those old news stories still show up, so a lot of people are still Googling that question, and they’re reading old news. But remember that all has changed, and the IRS came up with new rules saying that, if you got a PPP loan, it’s not income, you can deduct all the expenses even if you get it fully forgiven.
So, don’t make that mistake in your 2021 tax return. PPP loan funds, EIDL loan funds, those are not taxable income. So, don’t overpay in taxes.
Remember that we are a full-service accounting firm. If you need help with your personal taxes, corporate taxes, accounting, payroll, opening up a business, we can help you. Also remember that we are part of Freedom Group, where we can also help you with real estate, immigration, insurance and financial planning. A link to our websites is in the description below.
Once again, don’t make the mistake. Don’t overpay taxes. PPP loan funds and EIDL loan funds are not taxable income. Don’t add it to your gross sales.
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