States are taxing PPP Loan Forgiveness
Important information on states taxing PPP Loan forgiveness
Despite the federal intent to excuse PPP Loans from qualifying as taxable income, many states are doing just that. For instance, Utah requires businesses to pay taxes on the portion of PPP loans that have received forgiveness. The Utah tax assessment occurs in the year the loan forgiveness is received.
However, PPP expenses are fully deductible. To see how your state is affected, check out the Tax Foundation’s comprehensive list.
Typically, when businesses receive loan forgiveness, it qualifies as taxable income. Under the CARES Act, the PPP Loan is counted as nontaxable for federal income tax purposes. Earlier, the IRS and Treasury had decided to count PPP Loans as taxable income. However, President Trump signed HR 133 into law on December 27th, 2020, essentially reversing the decision. The last-minute legislation waived taxes on PPP loans. Again, some states now require businesses to pay taxes on forgiven PPP Loans.
The new COVID-19 relief bill signed by President Biden on Thursday, March 11, 2021, will base stimulus payments off of 2019 income unless taxpayers have already submitted their 2020 tax return. If you were impacted negatively by COVID-19 it likely will be to your advantage to submit your return as soon as possible.
Choose Drilldown Solution for Your Dental Tax Preparation Needs!
At Drilldown Solution, we are your one-stop-shop for all financial management and business consulting for your dental practice. When you partner with Drilldown Solution, you gain access to exceptional accountants and CPAs who can give you expert guidance and advice on all tax planning and tax preparation issues.
We know how to devise a tax strategy aimed at reducing liabilities and maximizing profits for your dental practice. Our team of tax experts will analyze your full financial picture and design a personalized tax plan to preserve your income.
Drilldown Solution offers a full suite of financial services that include bookkeeping, accounting, tax preparation, and dental consulting. We have the expert team to help any dental practice thrive, even under the current COVID-19 pandemic circumstances. We accomplish this with a three-part system comprised of patient-experience excellence, financial focused operations, and accountability.
Our goal at Drilldown Solution is to put your dental practice in the best financial position possible, utilizing proactive processes and personal care!