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Do I Owe Taxes on my PPP Loan?

Do I Owe Taxes on my PPP Loan?

10/12/2020 | Read Time: 2-3 minutes

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From: Sean Ludwig, Contributor to US Chamber of Commerce

“Paycheck Protection Program (PPP) loans have been a popular option for businesses struggling due to COVID-19, but understanding the tax obligations associated with them can be a challenge.

One of the largest ways the U.S. government has attempted to aid small businesses during the COVID-19 pandemic has been through Paycheck Protection Program (PPP) loans. More than $500 billion has been distributed through mid-July 2020 across five million loans, making PPP an enormously popular choice for small businesses.” In the state of Wisconsin alone over 85,000 loans were issued to businesses hoping to recover this year.

While the PPP program has been helpful for businesses, the tax implications associated with them have proved to be a little confusing. As the Coronavirus Aid, Relief, and Economic Security (CARES) Act and other coronavirus-related legislation were passed through Congress and signed into law quickly, the Small Business Administration (SBA) has tried to keep up by providing guidance. However, this guidance has been modified multiple times since PPP was passed and it can be challenging to keep up with the changes.

In a year of uncertainty and disruption, more than ever before, you will need to talk about your tax obligations with your accountant. Ask for a tax planning meeting in October so that you have a good plan before the year ends. You will likely have to pay your accountant for this advice but this investment could be the best dividends back to you this year.

Contact Huberty, we are a CPA based business advisory firm helping small business across Wisconsin make educated decisions on Paycheck Protection Programs loans and beyond. Visit https://hubertycpas.com/covid-... to request information on PPP Forgiveness