New Stimulus Bill Ppp Expenses

This supersedes irs guidance saying that if you paid business expenses with forgiven ppp funds the expenses would not qualify for small business tax.

New stimulus bill ppp expenses. Expenses used for ppp forgiveness are now tax deductible. Ppp loans are forgivable and despite normal tax rules if the loan is forgiven that will not be income. Educator expenses for protective equipment.

The vast majority of ppp borrowers use their loan money to pay wages payroll tax expenses utilities rent and interest which are all normally tax deductible. However treasury secretary steve mnuchin. Phil feigen and sara ainsworth on december 20 congress reached a deal on a new stimulus package the package included in the package is 284 billion for a second round of the paycheck protection program ppp 15 billion is set aside for live venues independent movie theaters and cultural institutions as well as an additional 20 billion for the economic injury disaster.

The new act tax provision also. This is causing owners and accountants everywhere to heave a sigh of relief. The bill clarifies that qualifying business expenses paid with forgiven ppp funds will still be tax deductible.

Covid stimulus package allows taxpayers to deduct expenses paid with ppp funds december 22 2020 by robert venables updated 12 28 20 to reflect the signing of the bill into law on sunday december 27 2020 president trump signed the consolidated appropriations act 2021 into law. 62 a 2 d ii educator expense deduction. The bill requires treasury to issue regulations or other guidance providing that the cost of personal protective equipment and other supplies used for the prevention of the spread of covid 19 is treated as an eligible expense for purposes of the sec.

When congress passed the cares act lawmakers indicated that ppp funds should not be taxable. These guidelines cover loans taken under the original cares act and second draw loans. Ppp 2021 adds additional eligible expenses for forgiveness.

The 900 billion covid 19 relief package passed monday provides 284 billion for a revised paycheck protection program ppp and clarifies that businesses can claim tax deductions for expenses paid for with forgiven ppp loans. The regulations or guidance will apply retroactively to march 12 2020. The new bill extends the covered period for first draw ppp loans through march 31 2021 this applies to ppp loans made before on or after the date of the enactment of the new bill including the forgiveness of these loans.