Positive changes in 2021 PPP
The COVID-19 relief bill signed into law by President Trump has some positive changes for farmers in the Paycheck Protection Program (PPP).
CEO Bob Rhea of Illinois Farm Business Management says there’s a big change for individual farmers who file a Schedule-F return, “They’re able to use their 2019 or 2020 GROSS income, the gross receipts for the year. You know, for a lot of our farms that’s a big number, a few hundred-thousand-dollars. The old rules required using NET income.”
Rhea says under the new law, the Employee Retention Credit and PPP are available to the same taxpayer in 2020 and ’21, “When this started last April, you had to use only ONE of those two benefits, you had to pick one. Most people picked PPP because it was better. But now they can have both. The only caveat is you can’t use the same wages for both benefits and for most people that won’t be a big challenge.”
And, he says, expenses paid with PPP loans are NOW deductible, “We always thought they were but then for a while in the middle of the year, IRS said ‘no’. But we have these deductions back and so you’ll be able to claim those as a 2020 tax deduction on your return without any adjustments.”
Rhea says the PPP loan itself is not included as income, so the process is a tax-free endeavor.
Rhea was on a Farmdoc Webinar with Dale Lattz, the head of the University of Illinois Ag Economics Department.