Dec. 22nd, 2020

US Congress passes $900-billion COVID-19 stimulus package

Late Monday night both houses of congress passed, and President Trump is expected to sign, a new stimulus bill that includes many tax provisions, as well as a new round of PPP funding.

Below are highlights of some of the provisions:

  1. Deductibility of expenses paid with PPP funds:
    1. Taxpayers whose PPP loans are forgiven are allowed deductions for otherwise deductible expenses paid with the proceeds of a PPP loan. Also, the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness.
  2. PPP round two:
    1. A second round of forgivable PPP loans are available for businesses with the following criteria:
      • Have 300 or fewer employees
      • Have used, or will use, the full amount of their first PPP loan
      • Experienced a 25% gross revenue decline in any quarter of 2020 compared with the same quarter in 2019
    2. For the first time, PPP loans are available to 501(c)(6) organizations that meet certain criteria.
  3. PPP simplified forgiveness:
    1. For PPP round one and PPP round two loans of $150,000 or less, there will be a simplified one page application process released by the SBA.
    2. PPP forgiveness will no longer be reduced by the amount of an EIDL advance.
  4. Employee retention credit:
    1. Business that have, or will, take a PPP loan are now eligible to take the employee retention credit.
    2. The refundable credit has been increased from 50% of quarterly wages paid up to $10,000 to 70% of wages paid up to $10,000.
  5. Business meals:
    1. Generally, the deduction for business meals are limited to 50% of the otherwise deductible amount. For 2021 and 2022, this 50% limit does not apply for food or beverages provided by a restaurant, making these expenses 100% deductible.
  6. Flexible Spending Arrangements (FSA’s):
    1. For plan years ending in 2020 and 2021, the grace period to carryover unused amounts remaining in a health FSA and depended care FSA is allowed to be extended to 12 months after the end of such plan year.
  7. Rebate checks:
    1. Individuals will receive $600 “recovery rebate” per eligible family member ($600 for individuals, $1,200 for married filing jointly, and $600 per qualifying child).
    2. The eligible amount is reduced at a rate of $5 per $100 of additional income over $75,000 of modified adjusted gross income for individuals, $112,500 for heads of households, and $150,000 for married filing jointly.

We are here to help:

Contact our team at Hungerford Nichols CPAs + Advisors if you have questions on how this will impact you and your business or organization.

Phone: (616) 949-3200

Contact our team at Hungerford Nichols if you have questions on how this will impact you and your business or organization.