Big Win for Some Small Businesses
Recently passed legislation allows for the tax deductibility of expenses paid using PPP loan proceeds that were, or are expected to be, forgiven. Deductible expenses include wages, rent, health benefits, utilities, software or cloud computer services, property damage costs related to civil unrest, supplier costs, worker protection expenses and other certain mortgage payments.
As a reminder the PPP loan proceeds forgiven are excluded from income.
This new guidance could be a boon for some small businesses, particularly for high tax rate payers who could see significant savings (as much as 37%) on tax-free PPP money they received. However, businesses will need to review how this legislation interacts with other tax provisions that provide tax breaks for expense write-offs and loss limitations.
Previous IRS guidance was withdrawn on January 6, 2021.
For more information, or assistance determining the tax break(s) for which your business qualifies, please contact us at 401-831-0200.