No announcement yet.

Mixed 1099/W2 and 7(a) loans from stimulus bill

First Prev Next Last
  • Filter
  • Time
  • Show
Clear All
new posts

  • Mixed 1099/W2 and 7(a) loans from stimulus bill

    I’m ignorant to the specifics of the 2T bill that was passed, but have read smatterings that suggest a sole proprietor may apply for the small business loans up to the level (technically up to 2.5x this) of payroll costs (inclusive of Employee salaries, wages, commissions, etc. up to $100,000 per year, $8,333.33 per month as well as retirement plan contributions and utility costs) which are incurred during the 8-week period that begins on the origination date of the 7(a) loan.


    I made 100k 1099 income last year. Since I’m not a corporation, the 100k (if no business expenses) would be considered net profit (minus SE taxes) and what I pulled from the business would be a draw and not an ‘employee salary’, correct? In other words, a sole proprietor has no employee salary?

    If I frontloaded my solo 401k during this time (the 8 week period) with my employer contributions (profit sharing) for the 2020 tax year, such would seem to fit under the definition of payroll costs and would give me a sizable grant to be forgiven. Correct? If so, I’d take out a 7(a) loan equal to the amount I plan to contribute as employer profit sharing (plus my business use share of my estimated utilities over these 8 weeks) and this would be forgiven?

    The 1099 income is already taking a big hit. I have W2 income also (which itself is taking a big hit but is still coming in). Does the mixed W2 and 1099 income exclude me from participating in this relief package (specifically the grant/forgiveness of the small business loans)?