Tax Implications of COVID-19 Small Business Assistance Loans
The coronavirus pandemic has shaken the world in unprecedented ways, particularly economically. In order to prevent total economic crumble, the president signed the CARES Act into law on Friday, March 27, 2020. This act set aside $376 billion to help workers and small businesses in the United States keep their jobs and businesses open. These funds were approved for borrowing from the U.S. Small Business Administration in four new programs:
- Payment Protection Program (PPP)
- Economic Injury Disaster Loan (EIDL)
- Express Loans
- SBA Debt Relief
Each loan program has different requirements and terms. As the end of the year nears, many business owners that participated in one of these loan programs are wondering what the tax implications will be. While some of these loans are forgivable, the expenses that are paid for with loan funds are not tax deductible. This means that business owners who accepted a loan could face much higher tax payments than usual. As the pandemic has continued, additional orders were signed that have impacted payroll taxes and more.
Understanding all of these implications as you prepare your taxes for this year can be overwhelming. Paramount Tax Services of Salt Lake City is here to help. Our team of professional tax preparers in Salt Lake City works closely with EAs to ensure the most accurate understanding of tax code and annual implications. We can help you understand how any COVID-19 relief funds will impact your taxes and prepare an accurate return. Additionally, we will ensure you are taking every possible deductible to minimize your total amount owed. Every penny counts, especially in a time of economic hardship. The Paramount Tax team is here to help you!
Tax Implications of Paycheck Protection Program (PPP) for Small Businesses Tax Services in Salt Lake City
As the tumultuous year of 2020 comes to an end, many small business owners are left wondering what their tax returns will look like. The unpredictable economic damage caused by the COVID-19 led to the passing of the Coronavirus Aid, Relief and Economic Security (CARES) Act. Through the Paycheck Protection Program, or PPP, this act allotted up to $349 billion in forgivable loans to small businesses for payroll assistance and certain other expenses. If your business applied for a PPP loan, you may be wondering about the tax implications. While loan forgiveness was promised for PPP loans (if at least 60% was used to cover payroll), expenses paid with forgiven PPP loan proceeds are not deductible. That means that expenses that are typically deductible, like utilities and rent, will not be deductible if you used the loan funds to cover them.
PPP loan forgiveness is possible if loan proceeds were used to cover the following expenses:
- Payroll costs and employee retention
- Interest payments on covered mortgage obligations
- Payments for covered rent obligations - Under this covered expense, "lease agreements for real or personal property" is included, which covers equipment and vehicles.
- Certain utility payments
If you are trying to manage PPP loan expenses as you prepare your taxes, Paramount Tax is the accounant in Salt Lake City that you can rely on.
Request Appointment
Economic shocks are hard to navigate and the implications of this past year are no different. Trying to understand how the PPP loan will affect your taxes is much more difficult on your own. Our talented team of professionals and tax preparers are here to help. Taxes are already overwhelming; you can expect this year’s filing to be doubly frustrating. With help from our expert tax preparers, however, you can rest assured that your taxes will be filed accurately.
Call 801-661-9433 today!
Hear Why Our Clients Love Us
Don’t Leave Money Behind
Maximize your deductions and reduce your liabilities. Schedule with Paramount Tax & Accounting Capitol Hill today
Paramount Experience
Many people do not know how a professional tax firm differs from a tax preparer. The main difference when working with a professional tax and accounting firm, such as Paramount Tax & Accounting Capitol Hill, is that our firm utilizes the services of licensed professionals.
Paramount has worked hard to create relationships to deliver the value that our clients expect. In fact, our goal is to be the No. 1 firm in Salt Lake City. So when you ask yourself, "Where can I find accounting services near me?"... think no further than Paramount Tax & Accounting Capitol Hill!
Upgrade to Tax & Accounting Firm
Whether you are filing personal taxes or you own a business, if you are not already using a professional tax and accounting firm, you have most likely already missed out on major tax benefits, deductions and credits. This is because a professional tax and accounting firm utilizes licensed professionals, who can not only advise individuals on personal financial matters but who are qualified to advise businesses, financial institutions, nonprofit organizations and government agencies on a wide range of financial topics. Our strict standards ensure that we understand the complicated tax laws and how to implement strategies that return the most benefits to individuals and businesses. Give Paramount Tax & Accounting Capitol Hill a call or visit our tax and accounting firm in Salt Lake City for a free consultation.
Why Choose Paramount Tax & Accounting Capitol Hill?
Through dedication to the three underlying principles of professionalism, responsiveness and quality, Paramount is committed to providing outstanding service to our clients.
