It’s that time of year when business finances become top-of-mind for everyone as tax season is at our doorsteps. As a reminder, Corporate (C and S) and Partnership returns are due by March 15, 2022 and Individual returns with Schedule C’s are due by Monday April 18, 2022.
Here are some things to note as you head into tax season:
- If you received a Paycheck Protection Program (PPP) loan in either 2020 or 2021, you need to file for forgiveness regardless of the size of your loan. As of this date, all PPP borrowers must apply for forgiveness. You can apply directly through the SBA if your loan is $150,000 or less at https://directforgiveness.sba.gov. If your PPP loan was over $150,000 you need to contact your lender directly. If you got your PPP from Prestamos, you can email us at email@example.com
- PPP loans are considered exempt from federal income tax under 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.
- EIDL loans are considered debt and therefore do not count as income. You can deduct any payment of interest on an EIDL loan as an interest expenses on your tax returns, and you can deduct expenses you paid with the EIDL funds.
- Grants, other forgivable loans, and certain funds from local or state government are likely to be considered taxable income and need to be reported on your tax return as gross income.
- If you had employees in 2021, you might be eligible to claim the Employee Retention Credit (ERC) up to $28,000 per employee. You can learn more about the ERC here: https://home.treasury.gov/system/files/136/ERC-COVID-Snapshot-5.7.21_full-text.pdf
- To learn more about expenses your business can deduct on your tax return, take a look at IRS Publication 535 here: https://www.irs.gov/publications/p535
If you need assistance determining the tax form you should be filing or need support in finding a qualified tax preparer, please feel free to reach out and we will help guide you towards the appropriate resources so that your tax season is low stress!