Is Student Loan Forgiveness Taxable

Is Student Loan Forgiveness Taxable

The U.S. Small Business Administration has released a form of one page that makes it easier to apply for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the latest stimulus law. 

The COVID-19 relief plan that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgiveness loans to help them to deal with the effects of economic collapse from the coronavirus pandemic. The law required that the SBA provide simplified forms within the first 24 hours of the legislation’s signing into law. This is to make it easier to apply for forgiveness. The legislation also contained conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who had a difficult time getting loans last year.

Is Student Loan Forgiveness Taxable

“The Small Business Administration met the requirement to issue the single-page form for the forgiveness of PPP loans within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued new forms that were updated.”

First Draw PPP Loan forgiveness terms

Is Student Loan Forgiveness Taxable – First Draw PPP loans given to borrowers who meet the criteria are eligible for full loan forgiveness if during the 8- to 24-week covered period following the loan’s disbursement

  • Pay and worker levels are kept at a constant level.
  • The proceeds from the loan may be used to pay for the cost of payroll as well as other expenses that are eligible.
  • A minimum of 60% of the funds go to payroll costs

Second Draw PPP Conditions for loan forgiveness

Second Draw PPP loans to eligible borrowers can be eligible for loan repayment when the loan is paid within an 8 24 week time frame.

  • The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
  • The loan funds could be used to pay payroll costs or other expenses that are eligible.
  • At least 60% of profits are used for the cost of payroll
  • How to request loan forgiveness and when

When all of the loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers are able to apply for forgiveness any time up to the maturity date of the loan. If they do not file for forgiveness within 10 months after the date of expiration of the covered period and the loan is not renewed, PPP loans are not deferred any longer, and the borrower will be required to make loan payments to their PPP lender.

Download Is Student Loan Forgiveness Taxable

Gallery of Is Student Loan Forgiveness Taxable