Do You Have Questions on Taxable Funds?

This week we cover questions about taxable funds that were made available during the pandemic. Also, we wanted to remind you that the extended tax deadline is quickly approaching (on May 17, 2021). Watch the video to learn more!

Transcript:

We hope you’re having a fantastic spring day. We’re getting some calls and questions into the ICS regarding the taxability of some of the funds that were received over the last year and during the pandemic. And so we wanted to give everybody the information really quick. First of all, baseline information, don’t forget that the extended tax deadline is actually Monday. It’s May 17, so if you haven’t taken care of your taxes, you may want to get that done before the end of day on Monday. Now, the two big questions that we typically get surround both the PPP forgiveness, those forgivable loans, or those forgiven loans, and then the other one is the provider relief funds, and that’s the money that you would have received, sometimes even automatically, from Medicare. And early on in the public health emergency, and during the middle of the COVID challenges that we face in 2020.

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So first of all, I want to get to the provider relief funds, because those are the ones that we get the most questions on. And the provider relief funds, unfortunately, are taxable income, so those funds that you receive from the federal government automatically into your bank account that were from HHS, it’s actually the provider Relief Fund. Those monies are taxable, and that’s one of the biggest questions that we received, and because most accountants may not be aware that that is the case, and so you can let them know that they are taxable income, both on a federal basis and on a state basis.

Now, in regards to PPP loan forgiveness, that’s different. Congress addressed that specifically, and what they indicated is is both the forgiven loan, which normally would be taxable, is not taxable for the PPP loans, and then additionally, the expenses can be included as appropriate business expenses to reduce your taxable income. So now most of your accounts are going to know that when they go to prepare the taxes, as far as the PPP loans, but it’s that, it’s that provide a relief fund that we really want to get into your hands, because that is a challenge, right?

So now here is the other thing. In regards to the provider relief fund, we want to let you know that we saw this coming, and we knew this was going to be a challenge and an issue. The Illinois Chiropractic Society began to work with other state associations around the country through our involvement with the Congress of Chiropractic State Associations, or Chiro Congress, and we signed a joint letter, kind of a sign-on letter, with almost 40 state associations and organizations, and sent it to the leadership to try to get them to change this. And of course, that was to no avail, and it is taxable for last year’s tax return. So hopefully this information helps you out, and don’t forget to get your taxes in by Monday. Talk to you later.