The IRS will not treat PPP loan forgiveness as taxable income. You can’t do that - personal income taxes are personal expense not a business expense. Our crowd-sourced data is for informational purposes only based on self-reported information. It may be smart to keep the funds separate and use the PPP loans to pay employees since 75% of the funds must be used for payroll in order to be forgiven. Proceeds of EIDL program-issued loans may be used as working capital to pay a variety of expenses, such as payroll liabilities, accounts payable, fixed debts (e.g., rent, mortgage, and equipment and vehicle leases), and other bills that would have been able to … This includes repaying direct federal debt (including SBA loans), as well as paying down or paying off loans owned or issued by federal agencies. To pay IRS tax penalties . Can you use your PPP or EIDL funds to pay your IRS income tax liability? No. Personal taxes NO, Business taxes YES. Because if I can do both of those, that’s $5k free money for the Payroll Tax Credit and $10k free money for the EIDL grant, and that would be $15k free money if I can do both.” Agree! The deadline to pay 2020 income taxes is April 15. If you Yep, I had to dip into my tax savings to stay afloat. While government loans (after a sometimes long wait) were a big relief for many, they also created a bit of confusion for some borrowers, because they were not exactly sure what they can use the money for. I'm curious about this, as well ... My opinion only here, but I would/will use the funds anyway I see fit for my business. Therefore, these loans will not be taxed, just like any other loan. While the EIDL loan is technically not being used to pay off debt, it still enables cash flow by freeing personal / business savings . These are the only loans done by SBA directly. Also, expenses paid for with your PPP funds cannot be written off as deductions on your taxes. View entire … And as a sole proprietor, you don’t have business taxes, you only have personal taxes. Credit or debit cards. The second option is quite convenient, even for self-employed. Many borrowers are doubting what they could use the EIDL for after receiving the funds from the federal government. Each business entity may be able to qualify. Expansion of your business . By using the EIDL loan to pay the tax, borrowers can use their savings (which they would have used to pay taxes) to pay other debt, such as credit card debts or other debts. A Schedule C with no employees and a net loss for 2019, would not be eligible for a PPP loan. You can use EIDL funds to pay off regular fixed payments, such as your business credit cards. You cannot use the EIDL funds to pay personal income taxes. New comments cannot be posted and votes cannot be cast. Yes, qualifying U.S. customers can use PayPal Credit to pay federal income taxes over time to the IRS through payUSAtax.com, on tax payments of $99 or more. If you would owe under 25K on this business income - which looks like pass thru SE taxes - consider IRS payment plan. It can’t be used to pay any personal expenses or debt obligations. The SBA does prohibit you from paying off specific types of debt, though. They do 5 year, so if payments won't bother you, use EIDL for monthly tax payments. A personal loan could allow you to borrow anywhere from $1,000 to $100,000, depending on loan limits. Businesses that receive EIDL loans are unable to pay several things without SBA approval, including paying dividends, paying bonuses to any employees, including non … I have read conflicting advise on here about whether or not you can use EIDL funds to pay your 2019 Income Taxes. Press question mark to learn the rest of the keyboard shortcuts. By using the EIDL loan to pay the tax, borrowers can use their savings (which they would have used to pay taxes) to pay other debt, such as credit card debts or other debts. I will keep a spreadsheet of usage from the EIDL but will have no problem using it how I would use any business proceeds. There are a few things you can’t use the proceeds for, and I believe they’re spelled out in your loan document, but keeping an Excel spreadsheet is a great way to track the use of the proceeds. It cannot be used to refinance old debt, for dividends or distributions to members or shareholders, or to pay tax penalties. It will be automatically approved on their website under 25K. The issue is if you were doing something like paying extraordinary bonuses or … It's safe and secure - the IRS uses standard service providers and business/commercial card networks, and your information is used … I assume as long as your business continues to pay what it normally has in the past. ... You can pay by internet, phone, or mobile device whether you e-file, paper file or are responding to a bill or notice. By now, many of our clients have received their SBA EIDL funds. I just don't see how they can reasonably expect to control how loans are used as we move on. If you use this option, the IRS will receive your tax payment right away. Typically, these include but are not limited to businesses that had to close because of COVID-19. At the end of the day this is a loan, pay according to terms and the SBA should be fine. Does the grant money I received affect this loan? They need to apply as self-employed and use their 2019 schedule C and employee payroll to calculate how much they are eligible for. The EIDL is meant to assist businesses as they recover from an economic injury as opposed to recovering from a physical disaster. These funds will be made available within days of application and will not need to be repaid, even if the business’s application for an EIDL loan is denied. “Business proceeds” is your key phrase here. You can check your balance or view payment options through your account online. Could it be argued that I lent $x amount of money to my business in order to meet its demands. While the EIDL loan is technically not being used to pay off debt, it still enables cash flow by freeing personal / business savings. Pay directly from a checking or savings account for free. Direct Pay. We have the answers for you. This could include purchases of supplies, including personal protective equipment (PPE), lab expenses, advertising, regular loan principal payments and other fixed expenses. You can use the EIDL … Even though it might seem silly to get government funds to pay the government, the EIDL loan allows small businesses to facilitate cash flow. 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