Posted on January 8, 2021 by email@example.com in Don't Miss This
More Info on the Consolidated Appropriations Act, 2021
Our partners at CBIZ have provided an excellent analysis of the most recent coronavirus relief legislation passed by Congress and ultimately signed by the White House on December 27th. Go here to learn more about the tax and PPP loan provisions in the new legislation.
Minnesota Taxation of PPP
The most recent Federal COVID-19 relief legislation no longer requires taxpayers to reduce business expenses on their federal tax return by the amount of PPP loan forgiveness they have received or expect to receive, essentially making the PPP loan amount nontaxable. However, according to the MN Department of Revenue, the PPP loan forgiveness is taxable on your Minnesota return.
The Minnesota Schedule M1NC (Federal Adjustments) form adjusts for any nonconformity with federal tax law at the state level. The M1NC directs taxpayers under its adjustment directions for the CARES Act Section 1106 Loan Forgiveness, as follows: “If you (the taxpayer) claimed Payroll Protection Program loan forgiveness on your federal return, take the amount that was excluded from the gross income for federal purposes and subtract the amount that would have been deductible if you had not claimed the loan forgiveness treatment. Include that amount as a positive number.” In other words, the total amount of PPP loan forgiveness is an add-back on the Minnesota return, thereby increasing Minnesota taxable income.
As always, things can change, so make sure to consult with your own accountant or attorney for counsel on your specific business situation.
Find COVID-19 Resources in Your Area
Recognizing that some businesses in the state may need assistance to withstand the challenges of COVID-19, many cities and counties have grant or loan programs available to businesses. The Minnesota Chamber’s Grow Minnesota! Partnership has compiled a list of available funding at the city and county level. Check out the resources here.
Democrats Drafting New Economic Relief Bill
It’s been reported that Congressional Democrats plan to introduce a new economic relief bill after the Jan. 20 inauguration of President-Elect Joe Biden that is likely to include $2,000 checks for individuals and additional aid for state and local governments.
Democrats are seeking to fulfill a promise made by Biden to voters on the eve of Tuesday’s runoff races in Georgia, which ended with two Democratic victories that effectively flip control of the now 50-50 Senate to Democrats, with Vice President-elect Kamala Harris as the tie-breaking vote.
Democrats’ slim margins of control in the House and Senate could temper their legislative agenda this year, but Schumer can use special budget reconciliation rules to push through certain legislative priorities with a simple majority in the Senate instead of the 60 votes usually required.