This is copied from turbotax community. "
For 2021 the IRS requires you report the expenses you paid with your forgiven funds and you report those expenses for 2020 if your 2020 funding was forgiven in 2021.
The questions are in regard to when you recognized the expenses that were covered by the PPP funds:
if you claimed the expenses when you paid them
if you claimed the expenses when you applied for forgiveness
or if you claimed the expenses when you were granted forgiveness
So this really matters if you had a 2020 loan that wasn't forgiven until 2021, but if you recognized the expenses on your 2020 tax return your answer is 1 (for example).
If you are filing your 2021 return and you have not yet received notification that your loan is forgiven, you will answer "PPP forgiveness not granted at the time of filing the return".
Is the question asking was it forgiven in 2021 or is the question asking was it forgiven in general? It was forgiven in general just not 2021 but 2022. Since everyone cover period was 2021 why can't I use option one? My loans were forgiven in general just in 2021. So can i use option 1? Please explain why or why not option 1?
