Last year we had a PPP loan that was forgiven. I was told that we do not need to report the PPP loan on our tax form. But, we also do not claim the expenses. Does that mean I need to write down our payroll expense? (Our payroll was much greater than the PPP loan.) Turbotax states that payroll needs to match our W2s, so writing down our payroll expense would mess that up.
Also, we received an EIDL grant from the government. Would that be considered an owners contribution? I am having a difficult time getting the return to reconcile.
Yes, you are correct that the PPP loan does not get reported on the tax return. It does need to be on the books as non-taxable income in the year that it is forgiven.
Back in December 2020, the Congress retroactively allowed PPP related expenses to be deducted. Please include all payroll expenses in your deductions. And by doing that, they will match the W-2s issued.
The Advance/Grant portion of the EIDL is not reported as taxable business income on your tax return. EIDL is not owner contribution but a non-taxable income. If the grant was given to a partnership or a corporation, the grant will increase owner's capital account.