Congress Passes Additional Relief for American Families & Businesses; Signed by President

us-capitol-coronavirus-aid-tax-legislation

Updated December 27, 2020.

What the Legislation Means for You

After months of negotiating, Congress passed a $900 billion stimulus package on December 21, 2020. The stimulus package is intended to aid individuals, families, and businesses across the nation with the ongoing COVID-19 crisis. This $900 billion is part of a larger $2.3 trillion package that allocates $1.4 trillion to fund the government through the fiscal year, known as the Consolidation Appropriations Act, 2021.

The bill was signed into law on December 27, 2020.  President Trump had originally signaled he may not sign the bill. He asked Congress to amend it and increase stimulus payments for Americans from $600 to $2,000 per person or $4,000 for couples.

The Adams Brown team continues to review the bill.  Below is a high-level review of some of the key provisions related to pandemic relief.

 

Business Provisions

  • Paycheck Protection Program (PPP) Expense Deductibility: The bill states business expenses paid with forgiven PPP loans are tax deductible. This stance breaks from current IRS guidance that expenses cannot be deducted and aligns with Congress’ original intent.
  • Round 2 of PPP Loans: $284.4 billion for a second round of PPP loan funding is included in the bill.
  • Simplified Forgiveness Application for PPP Loans of $150,000 or less: A simplified loan forgiveness application was introduced for borrowers of $150,000 or less. Loans will be forgiven if you, the borrower, submit a one-page certification to your lender.
  • EIDL Forgiveness: PPP borrowers were initially required to deduct the amount of any Economic Injury Disaster Loan (EIDL) advances from the PPP forgiveness amount. This bill repeals this requirement, giving business owners immediate access to cash flow, and allocates another $20 billion for new EIDL grants.
  • More PPP Updates: Learn more about changes in eligibility rules, how to prepare, and loan forgiveness updates.
  • Targeted Aid for Specific Industries and Institutions: The bill contains $15 billion for theaters and other live venues, $82 billion for local schools, colleges, and universities, and $10 billion for child care.
  • Work Opportunity Tax Credit (WOTC): The WOTC will be extended for five years.
  • Payroll Tax Deferral: Businesses that deferred collecting and remitting payroll tax as part of a CARES Act provision have more time to collect and remit. The deadline was extended from April 20, 2021, to December 31, 2021.
  • Meals Deduction: A 100% business expense deduction for restaurant-provided food and beverage is temporarily allowed. Allowable expenses must be incurred between December 31, 2020, and December 31, 2022. This deduction is an increase from 50%.  

Individual Provisions

  • Stimulus Checks: Taxpayers making $75,000 or less (or $150,000 if married filing jointly) will each receive $600 “stimulus checks.” Families will also receive $600 per child under 17 years of age.
  • Unemployment Benefits: The weekly additional payments of $300 will be extended through March 14, 2021.
  • Rental Assistance and Eviction: For those who lost their jobs because of the pandemic, the bill allocates $25 billion in emergency rental assistance and extends eviction protection to January 31, 2021.
  • Vaccine Distribution: $30 billion is allocated for vaccine procurement and distribution throughout the United States.
  • Credits for Paid Sick Leave: Paid sick and family leave tax credits, originally laid out in the Families First Coronavirus Response Act (FFCRA), are extended through March 31, 2021.
  • Charitable Contributions: Introduced in the CARES Act, the 2020 above-the-line deduction of up to $300 for taxpayers making charitable contributions (but do not itemize) was extended to December 31, 2021. The deduction is also expanded to $600 for married, filing jointly taxpayers.  
  • Extension of Student Loan Forbearance: The bill extends the current forbearance period created by the CARES Act to April 1, 2021, from January 31, 2021.

As more news unfolds from Washington, D.C., we’ll keep you informed. As always, contact your Adams Brown advisor with any questions you may have.

Please note: This content was last updated on December 27, 2020. For more information, contact Adams Brown.