Is the EIDL Advance (grant) considered taxable income?

[ReneeM7122]

The EIDL loan is a loan.  It is not taxable income, and it is not "tax-exempt" income either. 

It should be accounted for on your books, however, though there is no entry needed in TurboTax.

@trungson

[glucido]

Yes it is tax exempt income. It is essentially a grant. You do not carry this on your balance sheet as a loan because it is forgiven.

[etolnz]

Since it does not need to be repaid, it is no longer a loan. It became a grant.

[Elaine9916]

I added the EIDL grant to M-1, "other exempt income" for federal, but it leads to unbalance on California 100s, M-1. I can override it on M-1, 5b, but can't be e-file. I would like to know if can add the EIDL grant to CA schedule M-1, line 2 -not record on book this year (itemize) to offset, so that M-1 can be balanced?

[Dannyz]

Sorry to hear that.  Do not know what to say.  I overrode line 5b on M-1 and my e-file was accepted.

[kpcronin]

Turbo Tax Business is adding the amount of EIDL loan as an adjustment to the California State Tax Return.  Why is that happening since it is a loan to be repaid?

[etolnz]

The advance is not a loan since repayment is not required.

[JohnnyKilroy]

So with that being said, are any of the EIDL advances subject to the Treasury Offset Program for collection of any debt owed by an applicant ?

[GCKirt]

I am considered self employed and receive a K-1 and was laid off in 2020 due to COVID-19.  If I took the loan and used that money to offset income that was lost due to COVID-19 layoff, does it have to be claimed as income then?  And if so, since I am my own employer (?) can I claim the Employer credit for providing qualified leave to myself?  This seems convoluted but there is a big tax benefit if it is possible.

[ZoltanB45]

If the government told you that the loan was forgiven, then it would be income. As far as the employer credit, if you paid yourself a salary last year and you stlll got paid when you had "covid," then yes you get the credit. This is a credit that comes on your payroll tax not personal income tax.

If you are referring to the "self-employed sick leave credit", go to

1. Deductions and credits
2. Tax Relief Related to Covid 19
3. Select the option that suits you
4. answer the questions honestly and see if you qualify

[impuesta]

Can you refer to IRS documents instead of a third-party tax firm? 

[LeonardS]

Your EIDL Advance is not counted as taxable income on your federal tax return per changes implemented through the Consolidated Appropriations Act.

"...(3) Emergency EIDL Grants. Section 1110(e) of the CARES Act allows an eligible entity that applied for an Economic Injury Disaster Loan (EIDL) under § 7(b)(2) of the Small Business Act (15 U.S.C. § 636(b)(2)) in response to COVID-19 to request that the Administrator provide an advance that is not more than $10,000 (an Emergency EIDLGrant). An applicant is not required to repay any amount of an Emergency EIDL Grant, even if the applicant is subsequently denied an EIDL under § 7(b)(2) of the Small Business Act or a PPP loan under § 7(a) of the Small Business Act. See § 1110(e)(5) of the CARES Act..."

Ref: RP-2021-49

[nubbss]

I see the EIDL Advance grant is not taxable up to $10,000. What about SBA Supplemental Targeted Advance I received  in the amount of $5,000 ?

[JulieS]

No, the SBA Supplemental Targeted Advance is not taxable either. 

[nubbss]

Thank you for the information