The IRS often spells out its laws and rules in minute detail.
But not so much when it comes to the SBA which governs the Payroll Protection Program (PPP).
That’s why S corporation owners are confused, and have important questions about the rules that apply to their businesses.
Well, in this issue of the Tax Reduction Letter, we’ll provide straight answers to questions that may be on your mind.
Don’t miss the vital information that’s waiting for you when you read the full article titled Tax Tips: Four PPP Forgiveness-Answers for S Corporation Employees.
NOTE: This subject is complex and we can’t cover everything in this short email. That’s why it’s so important for you to read the full article.
Question #1: What do I do if my spouse owns 100% of the S corporation?
Quick Answer:
You are a non-owner employee, which means you are not stuck with the owner-employee limits. According to what the SBA recently said, you may rely on the laws, rules, and guidance available at the time of your PPP loan application. Read the full article for a complete answer.
Question #2: What do I do about an owner-employee without a W-2?
Quick Answer:
If that business-owner has received money from the bank through contractor payments, there’s a problem. If that person pays himself on a W-2 payroll, he lacks the look-back period of prior payrolls. Confused? I don’t blame you. Go ahead. Read the full article for a complete answer.
Question #3: What about an S corporation-loan based on a K-1?
Quick Answer:
If you applied for the PPP loan and got it based your K-1, and not on your W-2, be careful! If your lender tells you that the money you received can’t be forgiven, there’s a possible neat workaround that can help you out. We’ll tell you what it is when you read the full article.
Question #4: What if I have an S corporation and use a home office?
Quick Answer:
The owner should use an expense report to submit home-office expenses to the business for reimbursement. Plus, the S corporation should classify the reimbursement in the tax return as an office expense. The reimbursed expense won’t work for the PPP but there is a workaround as we’ll explain when you read this full article.