PPP Tax Question

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PPP Tax Question

Post by Utetooth »

My brother in law called me because he just got his PPP forgiven for his small business and so he is going to do a "mid-year bonus" for himself for about $70,000 and he wanted my advice on how to allocate those funds.

As I was writing up my suggestions on what to do with the $70,000 I have what I feel like is a dumb question that I could use your input on.

My question is, is that $70k taxable?

I know PPP forgiveness is not taxable on a Federal level and that his state has opted not to tax it but I presume that is at the business level. HIs small business is a C Corp (which I thought was weird) and so all of his "bonuses" in the past have been included as wages on his 1040 so I'm assuming that this $70K will be pre-tax for him on household/personal level. Is that right?

I have been researching this but I can't find a clear answer. If you have any input I'd be grateful.
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Re: PPP Tax Question

Post by bbqguru »

If he's a C Corp, it should be taxable just like any other wages or bonuses he pays himself.

We're a C Corp and everything was taxed as W-2 income, business as usual.
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Re: PPP Tax Question

Post by MP123 »

The PPP forgiveness won't be taxable income to the C corp.

But any bonus he decides to pay himself on W2 will be taxable income to him personally, as usual.

They're really two different things.
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