topic SBA EIDL Loan and S Corp Tax implications in Get your taxes done using TurboTax

SBA EIDL Loan and S Corp Tax implications

mhariush — Mon, 22 Jun 2020 04:56:16 GMT

I own an S Corp, I am the only shareholder, and I have one employee. I received an SBA Emergency Injury Disaster Loan and I cannot seem to find any information about how this will affect my tax return.

This is not the $1,000 per employee grant that is forgiven (which I also received).

I received a rather large amount as a 30 year loan. But since I am an S-Corp, is this loan considered income and will I have to pay taxes on this money as it sits in my company?

I will use part of it, but I will probably not use all of it this year. If I do not, and it sits in my bank account and as a balance at the end of the year. Do I need to take out what is not used as profit or pay taxes on the unused amount of the loan?

Re: SBA EIDL Loan and S Corp Tax implications

RobertG — Tue, 23 Jun 2020 18:02:25 GMT

Loans are not income, so the loan is not taxable when you receive it, and not deductible when you pay it back.

You can deduct the interest paid on the loan if the loan proceeds are used to pay business expenses.

You can also deduct or depreciate the business expenses you pay with the loan.

The loan is just a liability on your books, it does not affect your profit or loss.

Re: SBA EIDL Loan and S Corp Tax implications

Fdezwart — Tue, 20 Feb 2024 19:04:33 GMT

I closed my S Corp. Where do I report the loan interest paid on my EIDL loan.

Re: SBA EIDL Loan and S Corp Tax implications

PatriciaV — Wed, 21 Feb 2024 14:23:57 GMT

When you file the final tax return for your S-Corp, report the EIDL loan interest you paid as interest expense.

Be sure to check the box for "filing final return" under About Your Business in TurboTax Business. This tells the IRS you closed the business.

@Fdezwart