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mmm1958
Level 2

PPP loans on MA state taxes

Since MA has recently passed legislation  making PPP forgiven loans non-taxable, why is Turbo Tax still asking about PPP loans?  Will this be updated on software or should I just click no when asked about forgiven loans?  Besides which I did not have a PPP loan forgiven in 2020.  I received the proceeds in 2020, but it wasn't forgiven until 2021.    

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mmm1958
Level 2

PPP loans on MA state taxes

According to the mass.gov website:  forgiven PPP loans are not taxable for personal income taxpayers, including unincorporated businesses reporting income and expenses on Schedule C, partners in a partnership, and individual shareholders of an S corporation. Recently passed Massachusetts legislation excludes PPP loan forgiveness from gross income for 2020 for taxpayers subject to the Massachusetts personal income tax. Therefore, personal income taxpayers do not need to report these amounts.  I'm going with that.  

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9 Replies
jagoss45
Returning Member

PPP loans on MA state taxes

I am waiting on the same answer.  What do we do??

 

mmm1958
Level 2

PPP loans on MA state taxes

I'm going to wait and see if the problem is corrected.  Turbotax should really be removing the question as a PPP loan has no tax consequences.  

OliverRomeo
Returning Member

PPP loans on MA state taxes

TT MA updated this morning but still no fix on the PPP question! Any updates? 

jagoss45
Returning Member

PPP loans on MA state taxes

I just removed the entry and e filed.  I got sick of waiting. 

mmm1958
Level 2

PPP loans on MA state taxes

According to the mass.gov website:  forgiven PPP loans are not taxable for personal income taxpayers, including unincorporated businesses reporting income and expenses on Schedule C, partners in a partnership, and individual shareholders of an S corporation. Recently passed Massachusetts legislation excludes PPP loan forgiveness from gross income for 2020 for taxpayers subject to the Massachusetts personal income tax. Therefore, personal income taxpayers do not need to report these amounts.  I'm going with that.  

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oooooo123
Level 2

PPP loans on MA state taxes

Was this fixed in today's update (Apr 15)? It still wants to tax me 5% on my forgiven PPP loan.

OliverRomeo
Returning Member

PPP loans on MA state taxes

No it was not in the update today the 15th. I cannot believe this! 

martin6
New Member

PPP loans on MA state taxes

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?

mmm1958
Level 2

PPP loans on MA state taxes

While I have decided to use another tax program for MA state taxes, just curious about this issue.  Wouldn't Mass correct whatever returns are listing PPP loans as income? Or am I being naive.  

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