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Covid Stimulus and Taxes
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jakescia
Posted 2/23/2021 16:10 (#8853466 - in reply to #8853216)
Subject: RE: Covid Stimulus and Taxes



Oskaloosa, Iowa 52577

The girl was right.

1.  need the info in order to see if any more money is due, which becomes a credit/refund on tax return.  Overpayments are not repayable.

2.  CFAP payments are taxable just like any other farm program payment.  HOWEVER, I do not know if such are excludable from self employment tax if the recipient is receiving social security---------- as is the case for CRP.  Otherwise, such appear to be subject to SE tax.  If it is NOT, I would guess that the tax software will ask for that element to be reported by itself.  (I haven't looked at the 2020 software yet, so I am ignorant as to what ours is going to do.)

3.   PPP payments are NOT taxable, to the extent forgiven..........and the expenses used to calculate the amount forgiven are still deductible, just like "normal".........as would be those expenses NOT related to the forgiven amount.

With respect to the PPP payments and related expenses........we intend on putting a copy of the "forgiveness" calculation with the tax return...........and including the amount received as other income (line 10, Sch F as I remember)........with a corresponding deduction of the same amount on the same line, all in a sub-schedule attached to the tax return.

Reason-------I am not knowledgeable as to how the IRS will treat the receipt for other "gross receipts" tests, so at least we would be reporting the "gross receipts", in order to bypass any potential fallout from that..........and still would be excluding the income from being taxable.

NOTE---- doing the above is NOT a requirement.  It is merely a judgement call on my part, so don't expect your person to yay or nay the idea.

4.  The forgivable portion of the EIDL loans is also NOT taxable.

Have patience with your preparers this year......going to be a lot of hearsay, etc.  Best advice I would give is to REPORT it, and then show the offset to effectively not tax it, so that it can be argued that "we tried........our intent was honorable".

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