Is PPP Loan Forgiveness Taxable?
Forgiven PPP loans are not taxable for federal income tax purposes. But you must check with your state for state level taxation. We are listing the states below which announced the taxation of Forgiven PPP loans. We will update the list as more announcements come.

Forgiven PPP Loans are not taxable for state income tax purposes for the following states;
Ohio, New Jersey, New York, Florida, Alabama, Alaska, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Washington, Wisconsin, District of Columbia.

Are Expenses paid with forgiven PPP loans Deductible?
Yes. Expenses paid with forgiven PPP loans are deductible and you can deduct those expenses in your tax return.

Can I claim Employee Retention Tax Credit (ERTC) for the wages paid with forgiven PPP loans?
Yes. You can claim employee retention tax credit for the wages you paid with forgiven PPP loans. If you already filed your payroll tax forms, you can still request a refund for those periods.

What is Employee Retention Credit ERTC?
The Employee Retention Credit is a refundable tax credit for employment taxes equal to 50% of the qualified wages up to $10,000 an eligible employer pays to employees after March 12, 2020, and before January 1, 2021.

Update: ERTC is extended till the end of 2021 with the new The American Rescue Plan Act of 2021.

References;
SBA PPP website
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program

Disclaimer
This article is intended for informational purposes and should not be taken as legal or tax advice. You must consult with your tax, financial or legal adviser about your unique financial situation before acting on anything discussed in this article. TaxBasket LLC is providing informational content for general guidance to help small business owners become more aware of certain issues and topics and this article must never be considered as a substitute for advice provided by your tax, financial or legal advisers. TaxBasket LLC or its members cannot be held liable for any use or misuse of this content.