COVID-19 Relief Bill: What It Means For You

COVID-19 Relief Bill: What It Means For You

New COVID-19 Relief Bill Includes Economic Aid and Many Tax Provisions

On December 21, the House and Senate passed a $2.3 trillion omnibus bill and COVID-19 relief package. President Donald Trump signed the pandemic bill into law on December 27, triggering a second round of much-needed aid for Americans amid the ongoing coronavirus pandemic.

The massive, 5,593-page document includes a $1.4 trillion appropriations package to fund the government through September 30, 2021, a long-debated $900 billion COVID-19 relief and stimulus package, funding for COVID-19 vaccines and testing, expanded food aid programs, emergency education relief, airline, and transportation support, and extensions on eviction moratoriums. It also incorporated several new tax provisions and various measures.

 Second Stimulus Check

Like the CARES Act in March, the act includes a direct payment to taxpayers intended to boost the economy. Households will get $600 per adult and $600 a child, down from $1,200 and $500 in the first round in the pandemic. That means a single parent with two children will get $1,800 now after receiving $2,200 in the spring. The payments start phasing out when individual adjusted gross income exceeds $75,000, and the numbers are generally based on your 2019 income.

Tax Relief

Notably, the bill includes many new tax measures and another round of the popular Paycheck Protection Program (PPP). Included in the tax provisions are several items directly related to COVID relief, such as a provision allowing recipients of Paycheck Protection Program (PPP) loans to deduct associated costs. The bill includes a Tax Relief Act and various provisions to provide tax breaks to those suffering medical and economic hardships due to the ongoing pandemic. The act also extends many popular tax breaks for individuals and businesses, including incentives focused on restaurants and the dining industry.

 

Expenses With PPP Money Are Tax-Deductible

The act includes a clarification of the treatment of business expenses that received PPP loans that were subsequently forgiven. The IRS previously determined that any business expenses paid with the proceeds of a forgiven PPP loan, cannot be deducted. However, The latest COVID relief law states that “no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by [the loan forgiveness provision that says forgiven PPP loans will not count as income}.”

Simplified Forgiveness Application

The act determined that the PPP borrower will receive forgiveness by simply completing the form and maintaining records to substantiate how funds were spent. Loans up to $150,000 will be forgiven if the borrower submits a certification that provides the minimal required information and agrees to maintain relevant records for a determined number of years.

 Meals Expense Deductions for Tax Years 2021 and 2022

The act includes a temporary return of the business deduction for meals. The deduction allows businesses to deduct the full amount of meals, including beverages, provided at a restaurant for the year 2021 and 2022. This provision seeks to help encourage businesses to buy meals to help boost the restaurant industry.

What to do now?

The year-end Covid-relief bill contains various provisions that can provide a significant tax break to individuals and businesses. Of course, tax preparation is one of our services’ cornerstones, and we are always available to help further explain in more specific detail. If you have any questions, please feel free to contact us. We hope you learned something today. If you have any feedback or suggestions, we would love to hear them.

Second Round of PPP – Bringing Relief to Small Businesses

Second Round of PPP – Bringing Relief to Small Businesses

The Second Round of PPP Funding Has Favorable Changes for Small Businesses

If you’re a small business looking for financing relief to survive the storm caused by the pandemic, then pay attention. The Consolidated Appropriations Act was signed into law on December 27, 2020, and includes many forms of stimulus to support organizations and individuals impacted by COVID-19. The program’s reopening comes as the federal government extends efforts to preserve jobs and help businesses weather the coronavirus pandemic.

One of the most significant changes with the new PPP is that Congress made funding available to businesses that had previously received a PPP loan. Borrowers are eligible for a second-draw PPP loan of up to $2 million, even if an application for the forgiveness of an original PPP loan has not been filed.

More Businesses Will Qualify for Second Round of PPP

The new legislation allows new borrowers with 500 or fewer employees to receive a loan. Additionally, a second draw PPP loans are available for up to $2 million to organizations with 300 or fewer employees.

The Act expands the types of organizations that are eligible for PPP loans. Organizations that now qualify include 501(c)(6) organizations, veterans’ organizations, farmers, ranchers, and media organizations such as newspapers, television, and radio stations previously ineligible.

Second PPP Loan Eligibility

The new legislation permits borrowers that previously received and spent a PPP loan to apply for a “second draw” PPP loan. These second loans are subject to new eligibility requirements, including the following:

  • 300 or fewer employees (rather than 500).
  • Used or will use the full amount of the first PPP loan on or before the second PPP loan’s distribution date.
  • Experienced a revenue reduction of 25% or more in all or part of 2020 compared to all or part of 2019. This is determined by comparing gross receipts in any 2020 quarter with an applicable quarter in 2019.

Where to Apply for New PPP Loan

Begin your PPP loan application by contacting us at Randazzo Eschenburg & Associates. Our skillful staff will test your eligibility and match you with the appropriate loan amount. Our team can assist throughout the application process to ensure your loan experience is as seamless as possible. Contact your REA team member today to find out more.

Have More Questions?

The Consolidated Appropriations Act contains various provisions that can provide significant funding to businesses. Of course, financial advice is one of our services’ cornerstones, and we are always available to help further explain in more specific detail. If you have any questions, please feel free to contact us. We hope you learned something today. If you have any feedback or suggestions, we would love to hear them.