Finance32: Dental School’s Missing Curriculum
Finance32: Dental School’s Missing Curriculum
Great clinical skills simply are not enough for dentists to achieve financial success. Let Buckingham Strategic Wealth's Practice Integration Advisors share what else you need to know to realize your lifetime goals and obtain financial peace of mind.
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PPP Loan Forgiveness and Taxes

PPP Loan Forgiveness and Taxes

1/20/2021 9:00:00 AM   |   Comments: 0   |   Views: 99

Mike McAninch is a Practice Integration Advisor with Buckingham Strategic Wealth, where he specializes in helping dentists connect their money and their values to realize their most important financial goals.

One of the most considerable ways the U.S. government has provided aid to small businesses during the COVID-19 pandemic has been through Paycheck Protection Program (PPP) loans. And many dental practices have benefited greatly from them. The cash from these loans replaced lost revenue and kept companies afloat when shelter-in-place orders closed many businesses. More than $500 billion in these loans were distributed in 2020 alone, making PPP an enormously popular choice for small businesses hoping to recover.

However, almost as soon as the program was initiated, small business owners began worrying about the income tax implications of the SBA’s loan forgiveness option.

Sean Ludwig, a contributor to the U.S. Chamber of Commerce’s virtual magazine, CO, wrote the following summary addressing these issues:

“While the PPP has been helpful for businesses, the tax implications associated with these loans have proved to be confusing for many business owners. After the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020, the Small Business Administration (SBA) issued guidance that changed several times. Then the rules around PPP and taxes changed again in December 2020 with the passage of the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) of 2021.”

He then went on to tackle some questions that small business owners commonly have regarding loan forgiveness and its tax implications. Two frequently asked questions from the article, and their answers, are especially important for dentists to be aware of:

Does a forgiven PPP loan become taxable income?
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.

Can I write off payroll, rent and utilities as business expenses if I used a PPP loan to pay for them?
Yes. While the IRS and Treasury Department originally said otherwise, the CRRSAA in December 2020 changed these provisions so business expenses paid for with PPP funds can be written off like everyday business expenses. The decision was effectively reversed because some businesses may have had higher taxable revenue in 2020 due to not being able to write off as many expenses.

Be sure to speak with your accountant about your PPP loan and its impact on your tax return when forgiven. Still have questions? Please reach out to any of Buckingham’s Practice Integration Advisors. We are here to help!

Important Disclosures: The material provided is for general information and education purposes only and does not constitute investment, legal, or tax advice. Individuals should seek independent tax advice from a tax professional prior to implementing a new strategy. This information can change without notice as additional guidance becomes available. By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by Buckingham regarding third-party websites. Buckingham is not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-21-1714

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