covid relief bill

Richard A. Huffman, CPA, MST

Tax Partner

 

The House and Senate passed the Consolidated Appropriations Act, 2021 (CAA, 2021) which is expected to be signed into law by the President.

 

The CAA, 2021 bill includes the renewal and expansion of popular provisions in earlier COVID relief bills with the significant provisions summarized as follows:

  1. Paycheck Protection Program (PPP) forgivable loan expenses allowed as a tax deduction (overriding IRS ruling disallowing the deduction).
    • Uncertainty remains whether California and other states will conform.
  2. Reopen PPP for first time borrowers who have not yet applied or who previously withdrew their application.
  3. Second round of PPP forgivable loans for small businesses with less than 300 employees who have incurred a minimum 25% reduction in revenues.
  4. Expands eligible PPP forgivable expenses to include covered operations, property damage, supplier and worker protection costs.
  5. Economic Injury Disaster Loans (EIDL) are excluded from taxable income and are no longer added back to the PPP forgiveness amount.
  6. Businesses are allowed a 100% tax deduction for meals, including beverages, provided at a restaurant for 2021 and 2022.
  7. Employer credit for paid sick & family leave and the employee retention tax credits have been extended until March 31, 2021 and June 30, 2021.
  8. Direct payments of $600 for individuals earning up to $75,000; $1,200 for families earning up to $150,000 plus $600 per child.
  9. Additional $300 week in unemployment insurance through March 14, 2021.
  10. Deferred employee payroll tax payback period extended until December 31, 2021.
  11. CARES Act charitable contribution changes increasing the individual limitation to 100% of adjusted gross income and allowing a $300 above-the-line deduction has been extended to 2021.

 

Please consult your tax advisor at WFY to discuss how you or your business can benefit from the expansive provisions included in the relief bill, or click here to contact a WFY tax advisor.