More Coronavirus Relief is Here (this time you are going to like it!)
Surprise, surprise – it seems there was some holiday cheer on Capitol Hill, and a long-anticipated COVID relief bill was passed late last night. Below are a few highlights from the bill expected to be signed by the President this week.
Individual Updates
Additional stimulus checks of $600 for single taxpayers, $1,200 for married filing jointly, and $600 per dependent child. The phaseouts begin at $75K for single and $150K for married taxpayers and are fully phased out at $87K single and $174K married. Checks will start being mailed next week. As with the previous stimulus checks, the phaseouts are based on 2019 adjusted gross income. If a taxpayer did not receive the appropriate amount of stimulus money in 2020, a credit will be allowed on their 2020 tax return.
Unemployment benefits will be increased by an additional $300 per week until March 14, 2021.
For those who do not itemize, an additional charitable deduction of $300 for single taxpayers and $600 for married taxpayers may be claimed for 2020 & 2021. Also, the limitation for deductible cash contributions to a public charity increased from 60% to 100% for 2020 & 2021.
Business Updates
PPP Loan Updates:
2020 expenses paid for with PPP money are now deductible! This is true whether the loan was forgiven or not, and EIDL advance loans do not reduce the PPP forgiveness amounts.
There is now a simplified forgiveness application for loans under $150,000 that is a one-page, online application that will only be subject to audit for fraud or improper uses.
Another round of PPP funds will be available to those who did not receive monies the first round and those who can demonstrate a 25% or more reduction in gross receipts during a quarter in 2020 relative to the same quarter in 2019.
There are additional eligible expenses for uses of PPP funds such as covered operational expenses, covered worker protection, and covered supplier costs.
Borrowers now have the right to choose their covered period which can be any time between the time they receive the loan and 8-24 weeks.
100% deduction for business meals at ‘restaurants’ in 2021 & 2022 (normally business meals are subject to a 50% reduction).
Click here to read another great Forbes article from our favorite tax guru, Tony Nitti. Forbes Article
For those who already have projections prepared by our team, the above items will only make the answer better. If you have a fourth quarter 2020 estimate due on January 15, 2021 and need to adjust accordingly, please reach out to a member of our team. Please be aware that this legislation is very new and items above are subject to change as it becomes finalized. Also, please note that our office will be closed December 23-25 and January 1 and many are taking vacation during this time.
