Tax Update – December 21, 2020

tax deduction for payroll

Recent federal legislation will allow borrowers of PPP loans to take a tax deduction for payroll and other tax-deductible expenses incurred and paid with PPP funds. This new legislation reverses the IRS administrative policy, which disallowed a deduction for such expenses and will result in tax savings to businesses who used a PPP loan for tax-deductible expenses.

Businesses who applied for and received PPP Loans under $150K will not be required to complete Form 3508S or 3508EZ when applying for forgiveness. The new legislation will allow borrowers to complete a one-page application in which they attest to complying with the requirements of the CARES Act. The one-page application is expected to be available once the legislation is enacted.

Smolin, Lupin & Co. is committed to staying on top of PPP and EIDL changes. More details will be made available once the legislation is enacted. Please look for an upcoming webinar regarding the new legislation in January 2021.

Please contact your trusted Smolin Professional with any questions.