2020 Schedule C, self-employed how to report PPP received

[GeorgeM777]

@iagt.  Yes, TurboTax for 2021 will produce the PPP forgiveness loan statement.  To enter the information regarding your PPP loan forgiveness, go to Wages & Income, then scroll down the page and find the Less Common Income section.  At the bottom of the Less Common Income section, select Miscellaneous Income.  On the next page, you will see an option for Forgiveness of PPP loans.  Select Forgiveness of PPP loans and respond to the questions when prompted.

Here is a picture of the top part of the Statement we produced in our test return.  

[iagt]

Thank you so much for the prompt and completely accurate response!!

[pcs21]

Assuming one is filing a Schedule C for an individual sole proprietor business,

1. Shouldn't the EIN be listed, if one has, instead of the SSN # of the filer(s) as the PPP loan is associated with the business.

2. Shouldn't the text "Applying section 3.01(...) of Rev. Proc. 2021-49 ..." refer to Rev. Proc. 2021-48 instead as Rev. Proc. 2021-49 is for partnerships.

[JillS56]

Yes, if you have an EIN for your business, you need to include the EIN on the Schedule C and not the SSN.   

Yes, the language should be added.  

@iagt, @HelenC12 @LenaH @JeffreyR77 

A PPP loan forgiveness statement is required under RP 2021-48 per pg 23 of the instructions to the Form 1040.

Forgiveness of Paycheck  Protection Program (PPP) Loans
The forgiveness of a PPP Loan creates tax-exempt income, so although you don't need to report the income from the forgiveness of your PPP Loan on Form 1040 or 1040-SR, you do need to report certain information related to your PPP Loan.

Rev. Proc. 2021-48, 2021-49 I.R.B. 835, permits taxpayers to treat tax-exempt income resulting from the forgiveness of a PPP Loan as received or accrued: (1) as, and to the extent that, eligible expenses are paid or incurred; (2) when you apply for forgiveness of the PPP Loan; or (3) when forgiveness of the PPP Loan is granted. If you have tax-exempt income resulting from the forgiveness of a PPP Loan, attach a statement to your return reporting each taxable year for which you are applying Rev. Proc. 2021-48, and which section of Rev. Proc. 2021-48 you are applying—either section 3.01(1), (2), or (3).

Any statement should include the following information for each PPP Loan:

1. Your name, address, and ITIN or SSN;
2. A statement that you are applying or applied section 3.01(1), (2), or (3) of Rev. Proc. 2021-48, and for what taxable year (2020 or 2021) as applicable;
3. The amount of tax-exempt income from forgiveness of the PPP Loan that you are treating as received or accrued and for what taxable year (2020 or 2021); and
4. Whether forgiveness of the PPP Loan has been granted as of the date you file your return.

Write “RP2021-48” at the top of your attached statement.

[dermorgen]

What if there is a third PPP loan?  Both myself and my spouse recieved the loans but there is no option for a third loan?  And there doesn't seem to be any way to tie this to the actual businesses, instead showing up under personal.

[AliciaP1]

There was never an option offered for a 3rd PPP loan.

A 3rd stimulus payment was issued in the spring of 2021 that you may be referring to.  This was paid to taxpayers and their dependents personally and was not related to businesses.

You can find more information about entering your stimulus payments at How do I claim the Recovery Rebate Credit in TurboTax?

[dermorgen]

I was unclear.  MFJ, two business owners are EACH eligible for 2 loans.  So for a single tax return, they would need to be able to enter the data for up to FOUR loans.

And there doesn't seem to be a way to show which company took which loans.  😮

[AliciaP1]

For Schedule C filers the PPP loan is not reported separately. 

The receipt and forgiveness of the PPP loan is just a bookkeeping entry since the funds themselves are not taxable. 

The expenses you paid for with the funds are deductible on each of your Schedule C forms and are categorized as the type of expenses they are, for example, wages, payroll taxes, rent, etc.

[dermorgen]

I'm not sure we are communicating well.  I'm not discussing the taxation issues.  I am required to make a statement for each forgiven loan.  How can we do that if only space for 2 loans is provided?

M.

[AliciaP1]

Can you clarify which TurboTax product you are using and which section is "requiring" you to make a statement about the forgiven loans?

[Critter-3]

If there is a need to enter this info simply consolidate them but PPP loans are NOT reported as income on a personal tax return and their forgiveness is also not usually reported.  Are you completing an 1120-S ?  

[dermorgen]

This entire thread is about how to report the PPP funds. It is called:  "How to report PPP recieved"  A quote from the expert above:

Yes, TurboTax for 2021 will produce the PPP forgiveness loan statement.  To enter the information regarding your PPP loan forgiveness, go to Wages & Income, then scroll down the page and find the Less Common Income section.  At the bottom of the Less Common Income section, select Miscellaneous Income.  On the next page, you will see an option for Forgiveness of PPP loans.  Select Forgiveness of PPP loans and respond to the questions when prompted.

And yes, the place to report PPP forgiveness is there.  However, it only has TWO placeholders for loans, while many couples including myself will have more than two because they have multiple businesses or because both spouse have loans.

I am using the TT Home & Business 2021.

[Critter-3]

Again the reporting of the PPP loans or the forgiveness of them    is not required at all ... I have done zero of these statements in my private practice without incident.  

[DianeW777]

There is a solution. In a situation like you describe where you happen to have more than one or two Paycheck Protection Program (PPP) payments, two for each spouse, you should combine them for your entry. First combine yours and then your spouse in the second slot. Keep your documentation with your tax records should you need it later.

[dermorgen]

Critter,  Turbotax already has the reporting requirements added to the program.  That's not under discussion.  In order to help keep you from giving inappropriate information to others and to provide you assistance for your private practice:

The IRS released draft instructions for Form 1040.  Buried on page 23 of the instructions (page 24 of the PDF) is the following:

Forgiveness of Paycheck Protection Program (PPP) Loans

The forgiveness of a PPP Loan creates tax-exempt income, so although you don’t need to report the income from the forgiveness of your PPP Loan on Form 1040 or 1040-SR, you do need to report certain information related to your PPP Loan.

Rev. Proc. 2021-48, 2021-49 I.R.B. 835, permits taxpayers to treat tax-exempt income resulting from the forgiveness of a PPP Loan as received or accrued: (1) as, and to the extent that, eligible expenses are paid or incurred; (2) when you apply for forgiveness of the PPP Loan; or (3) when forgiveness of the PPP Loan is granted. If you have tax-exempt income resulting from the forgiveness of a PPP Loan, attach a statement to your return reporting each taxable year for which you are applying Rev. Proc. 2021-48, and which section of Rev. Proc. 2021-48 you are applying—either section 3.01(1), (2), or (3). Any statement should include the following information for each PPP Loan:

1. Your name, address, and ITIN or SSN;
2. A statement that you are applying or applied section 3.01(1), (2), or (3) of Rev. Proc. 2021-48, and for what taxable year (2020 or 2021) as applicable;
3. The amount of tax-exempt income from forgiveness of the PPP Loan that you are treating as received or accrued and for what taxable year (2020 or 2021); and
4. Whether forgiveness of the PPP Loan has been granted as of the date you file your return.

Write “RP2021-48” at the top of your attached statement.