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independent contractor ppp loan forgiveness

If you had a PPP loan prior to the Paycheck Protection Program Flexibility Act being signed, you can choose to use the original 8-week period instead of the 24-week period. The loan “forgiveness” creates the credit to an allowable cost, until the loan forgiveness is determined there is no benefit “accruing” to the contractor. But you do have to apply for PPP loan forgiveness, and there are specific items that you need to use these funds on in order to receive that forgiveness. The rule specifically addresses the calculation of loan eligibility and loan forgiveness for these sole proprietors and independent contractors. PPP Loans and Independent Contractors, Self-Employed and Gig Workers. OMB Control No. PPP Self-Employed Loan Forgiveness As of 6/10/2020 • Utilities Includes payment for electricity, gas, water, transportation, telephone, or internet access. You (the Borrower) can apply for forgiveness of your Paycheck Protection Program (PPP) loan using SBA Form 3508EZ if you can check at least one of the three boxes below: ☐ The Borrower is a self -employed individual, independent contractor, or sole proprietor who had no employees at the Using the information shown on the PPP loan forgiveness application, tax accountants will need to adjust deductions. If you’re a sole proprietor or independent contractor, self-employment wages, salaries, and commissions not exceeding $100,000 annually qualify as payroll costs. close up shot of ppp loan The U.S. Small Business Administration released a revised loan forgiveness application for the Paycheck Protection Program on Wednesday while also unveiling a … The other 25 percent can be used on most mortgage interest, rent, and utility costs. To qualify for loan forgiveness on a PPP, you’ll need to spend at least 75% of the loan on payroll expenses over the 8-week period following the loan disbursement. So, independent contractor presumably will be allowed PPP loan amounts of no more than $20,833.33 ($8,333.33 x 2.5). FAR 31.201-5 Credits reads: income determine the loan amount 8/52 = 15.385% Maximum forgiveness per employee earning more than $100,000 for 8 weeks - $15,385 24/52 = 46.154% Non-owner employee Maximum counted for 24 weeks - $46,154 Independent Contractor 1 Understandably, the forgiveness component of PPP Loans is particularly attractive to all potential recipients—including federal contractors. The contractor is not, however, able to recover the interest paid on the debt. On March 27, the CARES Act was signed to provide relief to businesses and taxpayers facing economic hardship due to COVID-19. PPP Loan Forgiveness Application, Template & Video for Nonprofits provides charitable execs clarification and the tools they need to turn a portion (or all) of their PPP Loan into a grant. Just as PPP loan applications were funneled to the SBA through borrowers’ banks, so are the applications for loan forgiveness, said attorney David Roth of Munsch Hardt Kopf & … Interest payments on any debt obligations that were incurred before February 15, 2020, however, that amount will not be eligible for PPP loan forgiveness. Thus, a forgiven PPP loan is effectively transformed into a grant with no tax consequences—no income from the loan itself, or from its forgiveness. Problems with PPP loans—ranging from eligibility to administration to inadequate funding—have been well documented. Use this resources to ensure you are ready when you receive your invitation into the Forgiveness Application Portal. Instead, the Independent Contractor Rule indicates that the partnership is permitted to apply for a PPP Loan and that the partnership can include the self-employment income of “general active partners” up to an annual cap of $100,000 for each such partner as part of the partnership’s payroll costs. Independent contractors and self-employed people can apply up to eight weeks of their pay based on their 2019 income tax return or $15,385 — whichever is the lesser — toward forgiveness. So I received the PPP loan from PayPal like one week ago. Self-employed individuals without employees who file an IRS form 1040 Schedule C can calculate their PPP loan amount as follows: I'm an independent contractor with no employees and I received my PPP funds today. Refinancing the EIDL loan made between January 31, 2020 and April 3, 2020; Restrictions of use of the PPP loan. PPP Loan Forgiveness Application Form 3508S OMB Control No. We created a comprehensive, comprehensible guide all about PPP loan forgiveness for the self-employed, sole proprietors, and independent contractors. 3245-0407 Expiration date: 1 1/30 /2020 A BORROWER MAY USE THIS FORM ONLY IF THE BORROWER RECEIVED A PPP LOAN OF $50,000 OR LESS. Thanks in advance for reading and for your guidance! Service must have been established prior to 2/15/2020 Limited to the extent it was claimed or entitled to be claimed on 2019 Schedule C Produced over the weekend by the team at QuickBooks University and reviewed by INSIDE CHARITY these utilities make sense of what is arguably the next important step nonprofits face as they navigate … Independent contractors receiving 1099-MISC forms and self-employed individuals are eligible to apply for these potentially 100% forgivable loans beginning on April 10, 2020. The loan can be used for other legitimate business expenses, but you may be required to pay back any portion of the loan not used for the specific items outlined above. For an independent contractor or sole proprietor, you must have claimed or be entitled to claim a deduction for these expenses on your 2019 form 1040 Schedule C in order to claim them as expenses eligible for PPP loan forgiveness in 2020. Click to read our complete article about requirements for PPP loan forgiveness. These FAQs are for informational purposes only, are general in nature, and should not be relied upon or construed as a legal opinion or legal advice. ... ☐ The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time If you received a PPP loan through Kabbage, sign into your dashboard for updates on loan forgiveness. At least 75 percent of the PPP loan proceeds shall be used for payroll costs. ... You will apply for PPP loan forgiveness through the lender that serviced your PPP loan. The U.S. Chamber of Commerce has issued this guide and cheat sheet to help independent contractors and self-employed individuals prepare to file for a loan from the CARES Act's Paycheck Protection Program (PPP) loans / grants, SBA's Economic Injury Disaster Loans (EIDL), and/or Unemployment Compensation for losses of income related to the coronavirus pandemic. The unpublished version of the update ensures full forgiveness for self-employed, freelancers and independent contractors who took the maximum loan amount based on 2.5 times their 2019 monthly income. Tax accountants want to allow time for extra effort. PPP Loan Forgiveness Application Form 3508EZ . A Paycheck Protection Program (PPP) loan is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, with $349 billion designated for PPP loans. Further, if a PPP loan tax return deducts amounts paid with unforgiven PPP loan proceeds, the tax return needs to include a safe harbor statement as per Revenue Procedure 2020-51. No more than 25% of the loan is used for non-payroll costs including rent, mortgage interest, and business utilities. The PPP Loan Forgiveness Knowledge Center is available to help you navigate the Paycheck Protection Program core concepts and requirements, along with additional guidance, resources and frequently asked questions. I’m a independent contractor (ya know that side hustle life). Self-Employed contractors can apply for Paycheck Protection Program loans. The SBA is no longer accepting applications for PPP loans. PPP Loan Forgiveness for the Self-Employed Frequently Asked Questions This calculator estimates forgiveness for self-employed individuals who file Schedule C and have no employees. You are eligible to apply for a PPP loan as an independent contractor or self-employed individual who has been or will be ... (but such amounts are not eligible for loan forgiveness) * You must have claimed a deduction on your 2019 taxes for ... You are eligible to apply for an EIDL loan as an independent contractor or self-employed person. Expiration Date: 10/31/2020 . Applications for loan forgiveness will be processed by your lender. Likely required documents for forgiveness are: - Schedule C for sole props, found in your 2019 tax return - 1099-Misc for Independent Contractors found in your tax documents from 2019 - If you used some of the PPP for other eligible expenses, beyond paying yourself, you will need to show documents verifying where the remaining funds went. Many federal contractors facing significant COVID-19 related hardships have either already obtained a Paycheck Protection Program (PPP) Loan or are somewhere in the process of applying for one. ... For a self-employed individual, independent contractor, or a sole proprietor, the self-employed individual, independent 3245- 0407 . You will need to fill out a PPP Loan Forgiveness Application form and submit that to your lender. 2 1 12. comments. Independent contractors have the ability to apply for a PPP loan on their own, so they do not count for purposes of a borrower’s PPP loan forgiveness. What counts as payroll costs for an independent contractor? The first thing to know is that you must use at least 75% (now 60%) of your loan funds towards maintaining payroll expenses in order to receive forgiveness of your loan. I'm unsure how to appropriately use the non-payroll PPP funds to pay my home office utility bills to ensure loan forgiveness. SBA Form 3508EZ (06/20) Page 1 . 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