Received a Schedule K-1. Shows Ordinary Income in Box 1 (includes the PPP loan amount). In Box 16 it shows Code B (Other Tax Exempt Income) and amount of PPP Loan. In TurboTax 2021, the program shows the full Ordinary Income amount from Box 1 of the Schedule K-1 [Schedule 1 1040 - Line 5 to Form 1040 Line 8] and the PPP Loan amount (forgiven tax exempt income) does not appear to be reported anywhere in the return. Is there a place I need to make an entry for Other Deductions to decrease the Ordinary Income amount from the K-1?
There is nowhere on your personal tax return to deduct your share of the non taxable PPP loan forgiveness.
Your Schedule K-1 should not include that the share of PPP forgiveness in box 1. You should reach out to have your Schedule K-1 corrected.
I posted the original loan and the loan forgiveness as directed by Quickbooks. It is posted as Other Income - PPP Loan Forgiveness and shows on the P/L. TurboTax Business then generated the Schedule K-1 with the Net Income from the P/L in Box 1 on the Schedule K-1 (includes the PPP loan amount) and the PPP Loan Forgiveness amount in Box 16, Code B, Other Tax Exempt Income on the Schedule K-1. Why is the tax exempt portion not being deducted from the Ordinary Income in Box 1 when I enter the info Schedule K-1 info into TurboTax Deluxe? The tax return has already been filed for the S-corp which includes the Schedule K-1. Seem either Quickbooks or TurboTax has something incorrect.
Please follow the instructions in this TurboTax Help topic to correct the reporting of your PPP loan forgiveness.
You will need to amend your S-corp return (form 1120-S).