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Mar 23, 2021 5:09 PM UTC
Question

How do I record employee loan forgiveness

If an employee is terminated while we still have an employee loan outstanding, how do I record in QB so that the balance forgiven shows on the employee's W2?

12 replies

Mar 23, 2021 7:42 PM UTC

Hi, @9130349659890896!

 

In QuickBooks Online, we'll have to set up a liability account where we can record the loan.  This account tracks what you owe.

 

These are the steps that will walk you through the process:

  1. Select Settings ⚙, and then Chart of Accounts.
  2. From the upper left, select New.
  3. Set the Account Type to either Other Current Assets or Current Assets.
    Note:
    • Create an Other Current Asset if the loan is to be repaid within the current fiscal year.
    • Create an Other Asset if the loan will be repaid after the current fiscal year.
  4. Choose Loans to Others in the Detail Type drop-down.
  5. Add a recognizable name like "Customer Loan-Lastname".
  6. Select Save and close without entering an opening balance.

You can also read these articles for more details: How do I prepare for Paycheck Protection Program loan forgiveness?

 

I'm always here to lend a helping hand if you have any other questions. Wishing you continued business success now and in the future.

 

Mar 24, 2021 12:55 PM UTC

Yes, the loans are recorded.  My question pertains to loan forgiveness.  If an employee is terminated while he/she has an outstanding loan, how do we record that in QB?