As we had hoped and expected, last night in a bipartisan fashion, both the House and the Senate approved a spending bill that includes a second round of stimulus. While most everything we had thought would be in the bill, when the final version was released, it contained some favorable tax provisions that we’ve outlined below that are different than what we originally expected.
Business:
- Expenses are deductible under PPP.
- EIDL grants are ‘added to’ PPP amounts for forgiveness.
- PPP expansion of forgiveness expenses to include PPE and software, cloud computing and accounting (thank you, AICPA!)
- If you returned funds in round 1 for PPP, you can re-apply for the maximum amount available to you.
- “Round 2” PPP is for businesses that experienced a 25% or greater drop in sales in a 2020 quarter (quarter to be defined) relative to the same period in 2019. Max loan size is $2m. Max employee size is 300.
- If you took PPP, you may also take the Employee Retention Credit, and the credit was increased to $14,000 / employee.
- Simplified forgiveness for loans below $150,000. (The SBA will produce a new simplified application by mid-January, so stay tuned for that.)
- Payroll tax deferral extended until 3/2021.
- $20BN in additional EIDL grants and $43.5BN for SBA debt relief payments for existing loans.
- FMLA style credits extended to 3/2021.
- Meals expense now 100% deductible in 2021 and 2022.
Individuals:
- 11 week extension of unemployment
- Stimulus checks of $600 per qualifying individual with similar income thresholds to original CARES ACT
- 2019 Income used for calculation of child tax credit if 2020 reduces credit.
- $600 / $300 charitable contribution IN ADDITION to the standard deduction (used to be one or the other)
- FSA balances can be rolled over.
- Extension of eviction moratorium
