You need to go into the Forms mode to make the entry. You will see an icon for it on the top right of your menu bar in TurboTax. When you see the list of forms on the left side of your menu bar, choose Form 1120S p3-5 and then you will find line 16(b) on page 4.
As far as I know at this time ... you will NOT report the grant on the return since it is NOT income AND the expenses paid with that forgiven loan / grant are also not entered on the return ... https://home.treasury.gov/news/press-releases/sm1187
The link you posted applies to PPP. I am asking about the EIDL advance. Any advice on that?
The EIDL is a LOAN ... NOT INCOME so you do not report it as income. The interest paid on the loan is a deductible expense just like if you used a credit card or line of credit to pay expenses.
https://www.sba.gov/sites/default/files/2020-09/COVID%20EIDL%20FAQ%20rev%20092120-508.pdf
If your EIDL is indeed a grant and NOT a loan then it is treated just like the PPP or any other grant.
Yes, the EIDL grant (the amount that does not need to be repaid) is entered as income on the tax return. "Other" income is an appropriate place to put it.
Is the EIDL advance considered to be taxable? If not, where do I enter that amount in TurboTax?
I did not receive the loan, but I did receive an EIDL advance, which is a grant that does not have to be repaid.
I used it for business expenses.
I have the same question as well. Some replies said the Grant should be put under "other income" since it taxable income but some said need not to report. I am so confused. Can the tax adviser from TurboTax give us a clear answer, please?
Thanks
They changed the law a few weeks ago. The new law says the forgiven amount from a EID loan is NOT taxable income, so it does NOT need to be reported as taxable income. But in order for it to affect the Basis box on the K-1, you need to enter it as tax-exempt income [edited].
It still needs to be reported on the tax return, doesn't it? Because it affects the company's assets and shareholder basis?
Would you put it on line 16b, Other tax-exempt income???
It is NOT taxable income. Yes, you need to enter it as tax-exempt income [edited].
If you file a Balance Sheet for a corporation or partnership, it would be on there. However, corporations and partnerships are really NOT a do-it-yourself project, and you really need to be going to a tax professional.
Economic injury disaster loan (EIDL) advances would normally be taxable. However, since they are associated with the payroll protection program (PPP) loans which are clearly not taxable, it seems likely that they are not taxable as well. However, it is hard to find direct substantiation of this in IRS regulations.
Assuming they are not taxable, you would not enter the EIDL advance as income on your tax return. There are typically differences between income reported on your company income statement and the income reported on your company tax return. So, your balance sheet as listed on your tax return will not necessarily tie into your income listed on the return. You reconcile the two on schedule M-1 on your form 1120 or 1120-S, corporate income tax return.
Assuming you used the loan or advance proceeds for qualifying expenses, the expenses would be deductible.
Coronavirus Tax Relief and Economic Impact Payments | Internal Revenue Service (irs.gov)
Eligible Paycheck Protection Program expenses now deductible | Internal Revenue Service (irs.gov)
Thanks for your advice!
Your answer clear lots of tax filer's cloud in their heard.
It is helpful!
It seems to me the EIDL Advance (which is not a loan; does not need to be repaid) affects shareholder basis and so should be reported on line 16b (other tax-exempt income).
I have gone completely through the TurboTax questionnaire and it never gave me an opportunity to enter this information.
Can you explain how, exactly, i enter this in TurboTax?
You need to go into the Forms mode to make the entry. You will see an icon for it on the top right of your menu bar in TurboTax. When you see the list of forms on the left side of your menu bar, choose Form 1120S p3-5 and then you will find line 16(b) on page 4.
What form is used for a LLC. 1120S is for Corporations.
Thanks, Susan
A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state may use different regulations, you should check with your state if you are interested in starting a Limited Liability Company.
Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”). Single-member LLCs file Schedule C, which is part of their personal tax return (Form 1040).
Specifically, a domestic LLC with at least two members is classified as a partnership (files Form 1065) for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation (files Form 1120 or 1120-S).
For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation (files Form 1120 or 1120-S). However, for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity. @susanmcturbo
so where does a LLC 2 member partnership, not regarded as a corporation enter the EIDL grant? What form and line please?
From the recent stimulus bill passed 12/27/2020, EIDL grants are not taxable. So if your total receipts are less than $250K and your assets are less than $1 million, you would not need to report it anywhere on your form 1065.
The pandemic has affected your taxes in many ways. Including reporting in TurboTax the amount of stimulus money you received. Click Here for more information on how the Pandemic affected your 2020 taxes.
ok, now I am getting it. I don't have to enter in anywhere on the 1065 because my LLC meets those requirements. But I do need to put in on my jointly filed 1040- it looks like it belongs on schedule k-1 for both parnters, line 18 (tax exempt income and non-taxable expenses), Code C (other exempt income)- right? Since the LLC is a pass thru entity, that will keep it from appearing in my taxable income.
If you enter it on your form 1065, schedule K, line 18(b), it will appear on your K-1 schedule in line 18. You will input this when you enter your K-1 form in TurboTax for your personal tax return, but it won't show on your tax return because the income is not taxable.
As mentioned in your answer, EIDL Grant is not taxable and need not to report on 1120S or 1120. However, when come to CA 100, there is a line in TurboTax asking to enter the Grant received. It seems in the State level, it is regarded as an income and thus taxable. My question is how can I handle this situation.
Hope someone would have an answer for me.
Thanks
There still seems to be a problem with the 1120S software. If you had an income of, say, $100,000 and had deductions of, say, $60,000 then your taxable income on Schedule K would be $40,000. If you received a tax free EIDL grant of, say, $2,000 then your total income would be $102,000 but your taxable income should remain $60,000. Unfortunately what I see is that even if you enter the $2,000 EIDL grant as advised in this discussion thread on Schedule K line 16(b), the taxable income on Schedule K (and the K-1s) remains $62,000 when it should be $60,000.
It sure seems to me that if that if Schedule K line 1) is $62,000 and line 16(b) is $2,000, then line 18) should be $60,000
As a result, no matter how many ways I try to enter the EIDL, either the Balance Sheet or the M-2 is out of balance...
Peter312, did you get an expert advise on your question? I am doing CA state part and it provided balance problems as you described. I was having problems with the PPP entry, too. CA State form 100S counts PPP as an income. However, I was able to fix the balance sheet by entering the offset in M1 Reconciliation of Income (loss) form, under 4 (b) Other. That fixed the balance sheet. Perhaps we can do the same with EIDL.
I'm filing the 1120S. I don't have a line 4(b) on the M-1. I do have a line 5 where the tax exempt income seems to go. But no matter what I do I can't get everything to balance. What a mess...
I'm not in California so don't know anything about your issues. 🙂