Many small businesses in Tennessee have turned to government subsidies for financial assistance as they struggle to deal with the COVID-19 outbreak. The Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) program, which features a $10,000 award, is one of the most well-known programs. Are these grants, however, taxable?
Any grant or loan a firm receives is typically regarded by the IRS as taxable income. The SBA grants, however, are not taxable as a result of the CARES Act, which was passed into law in March 2020. This implies that the $10,000 EIDL grant was not taxable income for the companies that got it, therefore they do not have to report it on their tax filings.
It’s vital to remember that while the EIDL award is tax-free, any other financial aid that a firm receives may be taxable. For instance, if a company received a Paycheck Protection Program (PPP) loan and had the loan forgiven, the forgiven sum is not taxable, but any costs incurred with the loan funds are not tax deductible.
Tennessee has offered financial assistance to small businesses in addition to federal grants and loans. For instance, the TN Reconnect grant offers up to $5,000 to companies affected by COVID-19. It is not yet known if this donation will be taxable as of October 2021.
It’s vital to keep in mind that the SBA award program will stop taking new applicants in December 2020. Businesses who got the grant in 2020, however, are still permitted to utilize the money for permitted costs and are not obligated to repay it. Overall, Tennessee’s small companies can get a variety of financial aid during the COVID-19 epidemic. The $10,000 EIDL grant is not taxable income, even if various forms of financial aid might be. To be sure they are adhering to all relevant tax laws and regulations, business owners should speak with a tax expert.
In conclusion, Tennessee’s small company owners have been getting financial support to help them survive the COVID-19 pandemic. The $10,000 EIDL grant is not taxable, despite the fact that various forms of help might be. Businesses affected by the pandemic can also get up to $5,000 through the TN Reconnect program. Businesses should always get advice from a tax expert to make sure they are adhering to all tax requirements.
For eligible adult students returning to college to achieve an associate degree or technical certificate, the Tennessee Reconnect Grant is worth up to $4,000 per year.