Updates to PPP & Tax Treatment

PPP reopened for applications on January 11, 2021 for both first and second round loans. There were also changes made in December 2020 that affect existing and new loans.

Everyone’s situation is unique and your lender and accountant are the best resources for information specific to your business.

Here are the answers to some common questions fishermen have. Read more about PPP and other opportunities for support at this LINK.

PPP FAQs

Q: Do crew members, as 1099 recipients who did not apply directly for a PPP loan but received some money through their captain, need to pay taxes on this income? 
A: Yes, to the crew member recipients, there is nothing significant or novel about these funds. They are taxable income just like any other funds they receive for their services.

Q: Relating to that, when creating 1099s for their crew, should a captain include any money that was from PPP with regular earned income on a 1099 or should they show it separately? 
A: If a captain is a sole proprietor, he should not issue a 1099 to himself. By virtue of his status as a sole proprietor, the funds he receives are income replacement and are tax-free. They should not be reported anywhere.

Q: Is there any assistance that a 2020 first-year skipper could be eligible for?
A: Only if their business was in place by February 15, 2020 they could be eligible for PPP. 

Q: Is there a difference between the owner of LLC and a sole proprietor with respect to the maximum forgivable amount to the owner? 
A: The maximum forgivable amount for a sole proprietor is $20,833. This will be limited by whether their 2019 income is greater than $100,000. If it is less, the limit is 20.833% of their 2019 income. ($100k per person /12 x 2.5 =20,833).

Q: Can a crew member (independent contractor who receives a 1099-MISC) apply for PPP directly? What if they received some PPP compensation through their captain?
A: A crew member can apply for PPP directly, however they cannot apply for themselves and also receive compensation through their Captain’s PPP loan – that is considered double dipping.

Learn more about PPP & other opportunities for support: LINK

PPP Program Website - SBA: LINK