Loan Amounts Forgiven Under Paycheck Protection Program
As of 5/9/2021, this is what TT states:
Under the CARES Act, the Paycheck Protection Program (PPP) was established to provide loans to eligible small businesses. The loans could be forgiven provided the borrower satisfied certain criteria. The CARES Act also provided that such forgiveness may be excluded from federal gross income, provided the proceeds were used to pay certain eligible expenses. On the federal return, forgiven PPP loan amounts need not be included in income, but borrowers could not take business deductions for items paid for with the loan proceeds.
Massachusetts does not exclude forgiven PPP loans from state taxable income. The amount of the canceled loan, less any expenses not taken on the federal return because PPP loan proceeds were used to pay for them, must be added back on the Massachusetts return.
Both of these items are incorrect. For federal tax purposes, the loan forgiveness is not considered taxable, as well as expenses paid for by the forgiven loan proceeds. Yes, we get a double dip this year from the government!
In March 2021, the Massachusetts legislature corrected its revenue guidance and followed, in step, with the federal rules. Therefore no tax on ppp loan forgiveness or on expenses made with those forgiven loan amounts.
Intuit is failing Massachusetts residents with their poor service and follow up. This is not the first issue that I've had with Intuit incorrectly carrying over federal amounts to the MA tax return. Fortunately, I'm a CPA and I know what to look for - thousands of others do not. My most recent issue (besides this PPP fiasco) was the incorrect calculation of 2019 tax liability for federal purposes. Fortunately, this resulted in a larger refund, but what about those that it hurt. Will Intuit compensate those users for penalties and interest?
I think its time to switch products. Does anyone have a recommendation?
