Congress passed a roughly $900 billion coronavirus relief bill yesterday which is expected to be signed by President Trump in the upcoming days. The relief package, which includes an appropriations package to fund the government, totals 5,593 pages. While we haven’t read the entire document, nor did the Senators who approved it with only hours to review prior to voting, we have summarized some of the key coronavirus relief funds and tax provisions that will be of interest to small business owners and individuals.
- Unemployment benefits were extended plus an additional $300 per week through March 14, 2021.
- Direct payments will be mailed in the amount of $600 to individuals and $1,200 to couples with phase outs starting at $75,000 for individuals and $150,000 for couples. Also included in the direct payments will be $600 for each dependent child.
- Additional funding was made available for businesses and self-employed individuals through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).
- The PPP loan forgiveness application was simplified for loans of $150,000 or less.
- Funds were allocated for vaccines, testing, health care provider support, schools, childcare, transportation and more.
Tax provisions included in the bill includes:
- Paycheck Protection Program forgiven loans will not be included in taxable income and no deductions will be denied that were paid for by PPP funds.
- Employee Retention Tax Credit (ERTC) was extended through July 1, 2021. The credit percentage was increased from 50% to 70% of qualified wages. Eligibility was increased for the credit through the gross receipts test which was decreased from a 50% decline year over year to a 20% decline and from 100 employees up to 500 employees. The credit per employee was increased to $10,000 per quarter and some employers who received PPP loans may now qualify for the ERTC.
- Charitable deductions for individuals who do not itemize on their tax return was increased to $600 for married couples filing jointly for 2021.
- Meals are 100% deductible for 2021-2022.
- Payroll tax deferral payback period extended through 2021.
- Unused health and dependent care FSA benefits can be carried over from 2020 to 2021.
- Deduction for qualified tuition and related expenses was permanently replaced by the lifetime learning credit.
- For itemized filers, the medical expenses deduction floor was made permanent at 7.5% of AGI beginning in 2021.
We encourage you to reach out to your contact at H&M for additional information on this massive legislation package and how it impacts you and/or your business.