Paycheck Protection Loans Can Be Taxed
As the Internal Revenue Service ( IRS ) continues to catch up with its backlog of paperwork, there is a problem that is emerging. They have determined that a growing number of Paycheck Protection Program ( PPP ) loans have been improperly granted forgiveness. These loans were first established to assist small businesses that were adversely affected by the COVID-19 pandemic in paying certain expenses. To have these loans forgiven, three criteria had to be met and that would allow the amount to be excluded from total income. For example, the loan had to be used to pay eligible expenses like rent, payroll, and utilities. However, upon further review, many of those who had their loans forgiven really do not meet those criteria. In situations like this, the loan amount is added to the total income for that year. This would require filing an amended tax return for that year. Be prepared to pay additional taxes, penalties, and interest if you fall into this catego