Updated: Mar 10, 2021
On Monday, December 28th, Congress passed a new $900 billion stimulus package that has been signed by the president in hopes of providing much-needed relief to the people and businesses affected by COVID19. It’s both an extension and modification of the previous Cares Act bill passed earlier this year, particularly for businesses that received PPP funds.
Here's what you need to know about this new bill:
The key issue businesses need to understand is that expenses paid by funds from the PPP loans are now tax-deductible, whereas previously they were not. Basically, you can now deduct expenses paid by your PPP loan received earlier this year through the initial Cares Act. PLEASE NOTE: North Carolina is not adhering to this change of the law.
If you received a stimulus check earlier this year from the first Cares Act passed on March 27th, then you should receive, from the IRS, a statement showing that you were paid by the federal government. Also, if you received the wrong stimulus amount or are still waiting on the previous credit, you can claim it (reconcile it) on your 2020 tax return.
Another factor to be aware of is, due to the timing of this new legislature, the release of 2020's tax forms may be delayed a few weeks. Typically, tax forms are released around the 3rd week of January but, this year may be delayed due to the nature of this bill. So, don't be surprised by that if it happens to be true.
Here are the main highlights of this new $900 Billion Cares Act Stimulus Relief Package:
A Continuation of Unemployment Insurance Compensation Benefits
Employees who find themselves without a job can continue to apply for $300 in federal unemployment insurance. The awarded time that was agreed upon is an 11-week extension for people needing continued relief.
A total amount of $325 billion in aid will be carved out for businesses including the Paycheck Protection Program which will receive $284 billion in funding along with a tax credit geared towards supporting employers offering sick pay leave for workers.
But, remember the key issue here is that the expenses paid by funds for the PPP ARE NOW TAX_DEDUCTIBLE, whereas previously it was not. In short, the PPP income is not includable and the allowable expenses are now deductible.
For Individuals and Families
Similar to the $1,200 Stimulus Checks released back in April 2020, this bill will provide relief in the amount of $600 to individuals who made less than $75k in 2019 and eligible couples who made up to $150,000 in 2019 will receive $1,200 checks. Some eligible dependent children may also qualify for a $600 check.
Under this new bill, an eviction moratorium that was scheduled to expire at the end of 2020 will continue through the month of January allotting more time for renters to come up with rent payments.
Those are the key points to be aware of, if you have any further questions or concerns for your particular situation, please don't hesitate to reach out to the Peridot Consultants for answers.
Please email us or call (828) 419-7170, firstname.lastname@example.org
Disclaimer: This is a brief synopsis and individual situations may vary. The above has left out many details for summation purposes. Do not take any advice from this column and please consult with relevant parties before making any decisions regarding the subject matter within. Any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this blog.