Congress has reached an agreement for COVID-19 relief & economic stimulus
It appears the holiday season has even managed to bring together members of Congress this year! Below are a few of the key points of the agreement giving us all a bit of hope going into the new year.
1. Tax Deductibility for PPP Expenses
From the time the initial PPP Loans were disbursed there has been a lot of back and forth on whether or not business expenses paid for with forgiven PPP funds were tax deductible. The AICPA argued that it was never Congress's intent to disallow the deduction of otherwise deductible expenses and Congress has agreed with that position.
What that means for you
If you received and had your PPP loan forgiven, you will be able to claim the same deductions you have in previous years regardless if the funds for those tax deductible purchases came from your forgiven PPP Loan. This will apply to the next round of PPP Loans (PPP2) as well.
2. You read that right - Round 2 of PPP Loans are coming!
The US Senate and House of Representatives allocated $325 billion in aid for small businesses struggling after nine months of pandemic-induced economic hardships. The bill provides $284 billion to the U.S. Small Business Association (SBA) for first and second PPP forgivable small business loans and $20 billion to provide Economic Injury Disaster Loan (EIDL) Grants to businesses in low-income communities.
What that means for you
Whether you applied for the PPP1 Loan or not, you may be eligible to receive the PPP2 Loan.
You may apply for PPP2 if you:
-Have 300 or fewer employees
-Have used or will use the full amount of your PPP1 Loan (if applicable)
-Can show a 25% gross revenue decline in any 2020 quarter compared to the same quarter in 2019
If you did not receive the first PPP Loan, you may apply now if you meet the following requirements:
-Are a business with 500 or less employees
-Are a Sole Proprietor, Independent Contractor or eligible Self-Employed Individual
-Are a Not-for-Profit, including churches
-Have accomodations and food services operations (those with NAICS codes starting with 72) with fewer than 300 employees per physical location.
3. PPP Loan Forgiveness Applications
A simpler version of the PPP Loan Forgiveness Application is being developed currently. If your PPP Loan was less than $150,000 you may qualify for the simpler Forgiveness Application and we may not need as much detailed information from you to submit.
What that means for you
This specific form is not available yet. If this form applies to you, please be patient. We will reach out to you once it is available. As always, if you have any questions in the meantime, please send us an email or give us a call.
4. Tax Credits
The employer credit for paid sick and family leave is extended to March 31, 2021. The bill extends the employee retention tax credit through June 30, 2021.
What that means for you
Fulltime employees are still eligible for two weeks (80 hours) of paid sick leave at their regular rate if they are unable to work due to quarantine, experiencing COVID-19 symptoms or are seeking a medical diagnosis; or, two weeks (80 hours) of paid sick leave at two-thirds their normal pay because of a bona fide need to care for an individual in quarantine, to care for a child whose school or childcare provider is closed due to COVID-19. Also, an additional 10 weeks of paid expanded family and medical leave at two-thirds rate of pay for an employee who has been employed for at least 30 calendar days is unable to work do to a bona fide need for leave related to COVID-19. (i.e. school closures, child care unavailable, etc.) If you are in need of more information, please feel free to reach out to us.
5. Direct Stimulus Checks
Congress has approved a stimulus check to be distributed in the amount of $600 to individuals who earned less than $75,000 and couples filing jointly who earned less than $150,000 according to their 2019 income tax filings. While the amount being given is less, the amount for each dependent in the home is not limited as it was previously and you should receive the full $600 for child dependents as well.
What that means for you
Be watching your accounts for these stimulus checks to be deposited. It is important to take note, if you filed your 2019 taxes after the first round of stimulus checks were disbursed, your checks may have been based off of your 2018 filings. If this is the case and you made more (above $75k/$150k) in 2019 you will not be eligible for the second round of stimulus checks.
6. Deductibility of Meals
Congress ruled that business meals are eligible to claimed as a deductible expense at 100%
What that means for you
In the past, business meals were only 50% deductible. For the next two years, meals purchased from a restaurant are fully deductible from your taxes at full cost. Save those receipts!
More Information Coming Soon!
This Newsletter was purely to provide you the information we have as soon as possible. We understand this has been a crazy year and we want to keep you as informed as possible as we navigate this season.
We will be sending out updated information over the next week as it becomes available. Until then, we sincerely hope you enjoy your holidays in health and happiness with those you hold dear.