One question that's come up during the COVID-19 pandemic is paying taxes on either stimulus check money or a PPP forgivable loan. Does it need to be included in income?
The answer is NO. According to the AARP "The short answer: No. In the somewhat longer words of the IRS: “No, the payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer's refund or increase the amount they owe when they file their 2020 or 2021 tax return next year." This is good news to those who worried that an unforeseen tax bill was on the horizon for 2020 and 2021.
"But what about my small business? I got a PPP Loan this year." USchamber.com states, "After the passage of the CRRSAA into law in December 2020, Congress made clear that a forgiven PPP loan is completely tax-exempt and is not taxable income."
Consequently, a new question arises. "Am I still able to deduct my rent or payroll expense against gross revenue if I used the PPP loan to pay for part or all of that expense?" Good news, the simple answer is yes. You write off all expenses like you normally would. The PPP loan money, if it is forgiven should not be included in gross income.