Can I Deduct Business Expenses Paid With a PPP Loan?
The Paycheck Protection Program (PPP) was introduced in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Under PPP, small businesses were given up to 24 weeks of cash flow assistance through federally guaranteed loans. In December 2020, a second stimulus package opened up a second PPP loan option for small businesses that had used all of the funds from their first loan.
The Paycheck Protection Program ended in May 2021. Due to the devastation of the Covid-19 epidemic, many small businesses found it necessary to take out loans through the PPP.
For those business owners, there are still a lot of questions regarding how to file their upcoming taxes. One of the biggest questions is whether you can deduct business expenses that you paid with your PPP loan.
The answer to that question is yes! In fact, you can still deduct your business expenses even if the loan was forgiven.
Congress is allowing the Paycheck Protection Program borrowers to deduct expenses paid with the loan. Most PPP loan borrowers used the program funds to pay wages, payroll tax expenses, utilities, rent, and interest, which are all normally tax-deductible.
Additionally, business owners do not have to include PPP loan forgiveness in income.
What If I Have Not Filed Taxes for Several Years?
Even if you have not filed tax returns for several years, you can still file a tax return for recent years.
Your history of non-filing will not affect the rule mentioned above. You can still deduct those expenses!
If you cannot find your records, speak to a tax attorney to develop the required legal approach.
What If I Owe IRS?
Even if you owe, you still get this PPP benefit. But those who owe taxes and took PPP loans are now one of the IRS’s target groups.
Talk to a tax lawyer. You need a plan. Get ahead of this problem. End it forever.
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