Stimulus Package And Ppp Expenses

The recently introduced and much anticipated stimulus bill titled the consolidated appropriations act 2021 the act has been passed by the senate and the house of representatives and is now awaiting signature from the president.

Stimulus package and ppp expenses. Blasnik cpa cgma partner. The new stimulus package also clears up the controversial issue of ppp deductibility and taxation. The covid 19 relief package set for a vote in congress would clarify that business owners can deduct expenses paid for with ppp loans which can be forgiven by the government without incurring a tax.

Clarity regarding the tax treatment of qualifying expenses the caa clarifies that for taxable taxpayers expenditures for ppp loan forgiveness qualifying expenses i e payroll costs mortgage interest rent and utilities are fully deductible in computing taxable income. Ppp 2 0 and other business relief. Highlights including deductibility of expenses for ppp loan recipients posted on december 22 2020 december 28 2020 the house and senate passed a new stimulus legislation that will include direct payments to americans jobless benefits and funds for businesses and vaccine distribution which the president signed on december 27th.

These additional qualifying expenses are not permitted to apply to the forgiveness of ppp loans obtained under the cares act. Stimulus package expands ppp simplifies loan forgiveness and adds disaster grants. You can get forgiveness for this ppp loan by spending at least 60 on payroll expenses wages salaries retirement group health insurance etc and a maximum of 40 on other qualifying expenses.

This would be a big win for small businesses in their struggle to stay cash flow positive in the covid environment. In an important move for pandemic hit businesses that took or plan to take a paycheck protection program ppp loan the 900 billion stimulus bill set to pass this week allows companies to deduct business expenses paid for with ppp funds even if the funds are forgiven. This is a huge bill with nearly 5 600 pages of text that combines.

In its massive new pandemic relief and stimulus package congress has significantly modified the paycheck. The deduction benefit could generate more than 100 billion in tax savings for business owners according to brookings institution estimates. The bill states definitively that business owners won t be taxed on their forgiven ppp loans.