What amount of your PPP is eligible for forgiveness?

The amount of the PPP (paycheck protection program) loan that CAN be forgiven is the FULL amount of the loan PLUS accrued interest. 

The ACTUAL amount of loan forgiveness will depend on the total amount spent over the 8-week period on:

  • Payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee. This means you can deduct a maximum of $15,385 per individual (because of the $100,000 limit).  “Payroll Costs” includes employee benefits, but not owner benefits.  

  • Benefits include health care insurance premiums, retirement contributions such as a 401k, and unemployment insurance premiums.

  • ALSO, PPP funds spent on mortgage interest, rent, and utilities will also be forgiven. Keep in mind that only applies to the 8-week period beginning with the date you received the loan.  Prepaid expenses are not forgiven.

  • Payroll for SELF EMPLOYED individuals will also be forgiven, however, the calculation is different.  For you, the calculation is 8 weeks of your 2019 net profit.  Your 2019 net profit comes from Schedule C, and is the amount on which you pay social security taxes.

Have questions about how the PPP may affect your business and how to plan accordingly? Please feel free to reach out to me - I counsel both individuals and businesses on tax and financial planning.

Rachel Burnsppp, paycheck protection program, irs, government loans, government assistance, cares act, relief funds, stimulus package, stimulus money for businesses, tax planning, financial planning, business finance, corporate taxes, tax preparer, gary levine, richmond, rva, va, virginia, central virginia, 804Comment