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Is the PPP Loan Forgiveness Taxable or Not?

By May 13, 2020 No Comments

ppp loan forgiveness taxableThe news said the PPP was effectively a grant.

The Cares Act said the loan forgiveness would not be taxable.

But the IRS is saying if you get the forgiveness, the government effectively paid for certain expenses for you and you can’t deduct them — or else it is a double benefit

So Is the PPP Loan Forgiveness Taxable or Not?

Before you get angry, calm down — it actually makes sense. And it really isn’t punitive to companies that are the most affected right now. Let us break it down to you by the numbers.

We will assume you got a $65,000 PPP loan that will be entirely forgiven. Let’s also assume that we will assume pre-COVID you were going to have $100,000 in revenue over the eight weeks, normally with $20,000 dropping to the bottom line, with a $50,000 payroll budget. Let’s look at the before vs. 20%, 50%, and 85% revenue decreases.ppp loan forgiveness taxable

At the end of the day, the PPP is still one of the most meaningful government assistance programs that small businesses have ever seen. 

Have More PPP Questions?

We’re continuing to offer extended CFO Office Hours so you can get 1:1 access to one of our CFOs if you need anything. Please reach out —  we’d love to hear from you and help anywhere we can.

And don’t forget — we have a free PPP Loan Forgiveness Calculator to help you plan. Download below:

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How does PPP loan forgiveness work?

We have a calculator for that.

Access your Paycheck Protection Forgiveness Calculator for free right here: