In light of latest PPP guidelines, self-employed people and independent contractors now get the whole loan forgiven automatically. Here are the main points on full loan forgiveness for self-employed people up to $20,833.

Who gets automatic PPP Loan forgiveness

Anyone who applied for their loan using their Schedule C can file for automatic forgiveness. Usually these are Sole Proprietors, Independent Contractors and owners of Single Member LLC’s.

How much am i able to claim?

Assuming your PPP loan didn’t include other payroll expenses, this amount covers your entire PPP loan. The maximum amount is $20,833.

How do I file for loan forgiveness?

There are no special conditions for self-employed people to follow. you’ll simply transfer the full loan amount to your personal checking account . When you complete the EZ Forgiveness application, you’ll enter the full loan amount  on Line 1.

Is a PPP Loan basically free money?

Essentially, Yes!  For the purposes of the PPP Loan, you are considered the employee and your loan amount is used to pay yourself. With the updated guidance allowing 2.5 months’ worth of net income as OCR, meaning your entire PPP loan might be used for private purposes—essentially free money.

Is a PPP Loan for Self-Employed considered taxable income?

While the CARES Act indicates that forgiven PPP amounts aren’t taxed and may be treated sort of a tax-free grant, this may change in the future. Until further guidance is published, we recommend working under the idea that you simply will got to report the claimed OCR as income on your 2020 income tax return.

How does PPP Loan work with PUA or unemployment benefits?

The Owner Compensation Replacement are going to be considered to be income for unemployment purposes, so it’s not very compatible with unemployment benefits or the PUA. After your PPP covered period, you’ll resume collecting unemployment benefits.