Nothing specific needs to be done regarding your EIDL Grant/Advance. It is non-taxable income.
For Schedule C income, there is no need to report it.
If you are reporting income from Schedule K-1, it will be reported when completing the business return on Schedule K as non-taxable income, as well. Enter the Schedule K-1 as received.
For more information about EIDL Grants/Advances, see: SBA Economic Injury Disaster Loans
It's non-taxable for the federal return, but it is taxable in states (Specifically California).
I marked it as non-taxable in Quickbooks; TurboTax State asked whether there was an EIDL Grant (answered yes) and now there is a balance sheet mismatch in TurboTax for the State return.
Any clues gratefully accepted.
The PPP loan is exempt from Federal taxation and to most states. California, for one, conforms to Federal taxation and therefore, PPP loan is non-taxable For taxable years beginning on or after January 1, 2020, California provides an exclusion from gross income for covered loan amounts forgiven under the federal CARES Act, Paycheck Protection Program and Health Care Enhancement Act, or the Paycheck Protection Program Flexibility Act of 2020.
See, ftb 2019-2020 legislation, link.
My statement was about the EIDL Grant, not PPP. See, for example, the summary of California. AB 1577 (Ch. 20-39) here.
Any solution to this? I am also in California and the EIDL grant is causing a mismatch.
No solution that I could find from TurboTax.
I finally went into Forms View to the balance sheet, and added a line item to income adjustments that said "EIDL GRANT, TAXABLE IN CA, BUT NOT FEDERAL" I don't guarantee that's the "right" way to do it, but am hoping that the CA authorities will have mercy on my soul for trying to do the right thing and not penalize us too much.
It would have been really nice for TurboTax to have handled the EIDL correctly, since there have to be numerous businesses in CA fighting this problem. C'est la vie.
Hi,
Can you tell me which line this is "added a line item to income adjustments"? CA has to make everything more complicated.
Thank you
For our case (S-corp):
1. Go under Forms View (Click on "Forms" in the upper right corner.)
2. On the left-hand pane: Click "Oth Add/Ded" under the major heading "California S Corporation"
3. The top of the form it brings you to says "Form 100S, Lines 7 and 12"
4. Item 9 on that page says "Other state adjustments to ordinary income (loss)".
5. I entered "EIDL Grant Received" for the text and put the amount in the right-hand column.
You'll also see further down on that page more verbiage about the EIDL, and for some reason, the numbers column is not a simple addition. The bottom line though is that the bottom of part one "Total to Form100S, line 7" then has the value of the EIDL Grant, which solves the balance problem.
There's clearly a bug in TurboTax, which can be further exercised by the procedure outlined in this post. In short, if you go back an uncheck the EIDL in TurboTax, finish the form, and then go back and re-check the EIDL in TurboTax, the balance sheet mismatch will double. If you do that again, it will triple.
Anyway, hope that helps and good luck to you.
For anyone looking to resolve this for a LLC, here is how I did it:
1.) Use the "Forms" view
2.) Jump to Form 568 p5-6
3.) In line 4d Other, I entered "EIDL GRANT - FEDERAL EXEMPT" and the amount. The total other should update now.
This is assuming you answered YES to EIDL Grant in the Step-by-Step view. Otherwise you need to enter in the EIDL Grant in Form 568 p1-4, Schedule B, Line 10 Other income yourself in the form view.
That should work!
Regarding the State taxability question-is Advance the same thing as a grant?
The question you are asking really is: Do you have to pay it back? If you have to pay it back, it is a loan and not a grant. We got the info from the bank that provided the money.
Hope that helps, and good luck.
Are you referring to the $1,000 per employee with a cap of $10,000 EIDL grant? The Consolidated Appropriations Act states:
An eligible entity, after submitting a request to the SBA, shall receive $1,000 per employee or a cap of $10,000. You do not need to repay these grants.
These funds are not reported as taxable business income on your tax return. Refer to your state for taxability on the state tax return.
This article refers to state taxability of PPP funds which may or may not be treated the same as the EIDL grant.
I wasn't even sure how the dollar amount had been determined, but yes. I was just surprised to see it considered taxable to CA and hoping it wasn't.
Thanks
Here's a hypothetical scenario hopefully someone can answer.
You have 10,000 in normal income for you business and 5000 in EIDL grant received. You have a total of 15000 in expenses which includes expenses paid using the grant money. Since the IRS is not taxing the EIDL grant, it will not be reported as taxable income. However, since the expenses paid using the EIDL grant are deductible, 1120S will essentially show a loss correct? Because they are only seeing 10,000 in taxable income minus the 15,000 in total expenses deducted. The 5,000 EIDL grant has no say in this part.
Would that be correct? This should technically show a loss on 1120S? Which will be passed down to the shareholders.
It sounds right to me, but I'm no IRS wiz. [However: If you're in CA, there's no loss on the state tax because the grant is taxable and counts as income.]
Correct, on the 1120S, income of $10,000 - expenses of $15,000 = loss of $5,000.
On an 1120S, report the $5,000 as non-taxable income on line 16(b). It will be reported as a reconciliation item on the M-1 Worksheet.
This article states:
EIDL Advances Are Not Taxable; Expenses Paid Are Deductible
The new stimulus law provides that the EIDL advances are not taxable income. And otherwise deductible business expenses paid with EIDL advances are tax-deductible.
As self employed individual, how do i fulfill EIDL grant reporting for California purposes in Turbo tax? Obviously the grant ($1000) is non-taxable, therefore not an addition/deduction from the federal return, where the EIDL isn’t prompted. However the corresponding prompts in TurboTax under state would treat it as add/ded. Is it really enough to add it to form 4197 without amounts and file?
by the way my grant was issued in 2020 but I didn’t report it then bc I couldn’t find it in TT.
Normally, the EIDL loan is not considered as income and is not taxable. You do not need to enter it on your federal tax return but California seems to want the form 4197 filled out. There doesn't seem to be a lot of verifiable information out there but I did find this. I posted this in your other post also.
Yes, here is an explanation from the on-demand tax guidance in turbo Tax regarding form 4197.
Note: For taxpayers that benefited only from the PPP, other loan forgiveness, or EIDL program, complete only Part I, column (a); do not complete the rest of the form.
If you personally benefitted from this in the matter prescribed above, then you need to include the 4197 in your California State return. Here is the direct method of accessing that form in your program.
@Jasminsreichle12
[ Edited 03/21/22|07:54 AM PST]
Thank you! So that means, the amount does not need to be disclosed? Do you know how to add EIDL and PPP both if using the online version? It seems like i can only do one or the other.
@jasminreichle12 If your EIDL grant was issued to you in 2020 as you said then you do not have a reporting requirement. You do not need to report it on your 2021 return at all - in fact, you'll most likely confuse California if you do.
Do I have to enter eidl twice as I got the targeted advance and the supplemental advance? Plus the online only let's me enter ppp but I got both