Congress recently passed the Consolidated Appropriations Act, 2021. This tax, funding, and spending bill contains a nearly $900 billion COVID-19 aid package and includes another round of available Payroll Protection Program (PPP) funds. The emergency COVID-19 relief package aims to strengthen the economy, provide relief to small businesses and the unemployed, deliver stimulus checks to individuals, and provide funding for COVID-19 testing and the administration of vaccines.
For more information and assistance understanding the new bill, contact your advisor or a member of our team today. Highlights of the new legislation include:
Payroll Protection Program (PPP)
- Deductions will be allowed for expenses funded with forgiven PPP loans
- Economic Injury Disaster Loan advances up to $10k no longer count as an advance of PPP loan forgiveness and are exempt from taxation
- Simplified forgiveness for loans under $150k
- This will be a one-page certification/application, but is still yet to be published by the SBA, so we recommend holding off on applying for forgiveness if your loan is below this new threshold
- PPP Round 2
- A new round of PPP funds ($284 billion) was authorized to help provide relief to small businesses
- Final rules are to be set within 10 days of the passage of the bill
- Eligibility requirements for PPP2 include
- Business must have fewer than 300 employees
- Business must have seen a revenue reduction of at least 25% in any calendar quarter in 2020 (compared to the same quarter in 2019)
- The maximum loan amount is capped at $2million
- Eligible expenses for PPP2 (and original program) have been expanded
- While 501(c)(3) organizations were eligible for the original round of PPP funds, 501(c)(6) organizations are now eligible to apply for the new round of PPP funds
- A new round of PPP funds ($284 billion) was authorized to help provide relief to small businesses
Other Business-Related Stimulus Provisions
- Employee Retention Credit
- The credit rate is increased from 50% to 70% of qualified wages and the limit on per-employee wages is increased from $10,000 annually to $10,000 per quarter
- Businesses with PPP loans are now eligible for the Employee Retention Credit
- Credit period extended through June 30, 2021
- Families First Coronavirus Response Act (FFCRA)
- Payment of covered sick leave extended to March 31, 2021
- Meals expense tax deduction increased from 50% to 100% for 2021 and 2022
Individual and Other Tax-Related Provisions
- Stimulus Checks
- A new round of $600 stimulus checks are available in full for those with adjusted gross income of $75K (single) and $150K (married, joint), including dependent children
- Â Checks are expected to phase out above these income levels
- Unemployment
- The bill provides an additional $300 per week for all workers receiving unemployment benefits, through March 14, 2021
- The Pandemic Unemployment Assistance (PUA) program was also extended in this new legislation
- Charitable Giving
- Removal of income limits on cash gifts made in 2021
- Increase in above the line charity deduction from $300 (2020) to $600 in 2021
- Higher Education – Increased income limits for Lifetime Learning and American Opportunity Education credits
We will continue to provide additional guidance to you as it becomes available.
Please contact your advisor or a member of our team if you have any questions regarding your PPP loans, how to apply for the new round of PPP loans, and the impacts of this updated legislation.