Under normal circumstances, forgiven loan amounts are generally taxable for federal income tax purposes, but the CARES Act, under section 1106(i) of the act, expressly excludes the forgiveness of PPP loans from federal gross income, and thus federal income tax.
Likewise, people ask, how do I enter a PPP loan in Turbotax?
In Turbo Tax, Go to the Balance Sheet, Income reconciliation and quick entry, there you can enter it as tax exempt income. Accounting: When you received the money you debited cash and credit PPP loan payable.
In this regard, is self employed PPP taxable?
However, there is some good news for self-employed individuals, who are taxed on business profit. The forgiven amount of the PPP loan is not subject to income tax (or technically a reduction of costs eligible to be expensed for tax purposes) as it was never claimed as a business expense.
What PPP loans are tax deductible?
Now, funds from a PPP loan can be used for any of the following purposes: Payroll expenses, including salaries and wages, paid time off, and employee benefits. Mortgage interest. Rent.
To enter PPP loans for Schedule C, Schedule E, or Schedule F:
- Scroll down to the Income section.
- Look for field(s) labeled State taxable income from a forgiven Paycheck Protection Program loan at the bottom of this section.