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    • Most Recent Insights
  1. Home
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  3. COVID-19 Stimulus Bill

COVID-19 Stimulus Bill

Posted by Sarah Russell on December 29, 2020

Sarah Russell

After a surprising delay, on Sunday, December 27 President Trump signed the $900 billion COVID relief bill which was part of the larger annual federal spending package. Below is a summary of the highlights included in the Stimulus portion of the bill.

Changes to the Original Paycheck Protection Program (“PPP”)

  • Expenses paid with forgiven PPP funds are now deductible. This is a material, and welcome, change from existing IRS guidance.
  • Borrowers are now able to choose their own covered period if it is at least 8 weeks and not longer than 24 weeks. This provides a slight change to the current loan forgiveness application and provides borrowers with more control over how to handle potential workforce reductions.
  • Congress expanded the types of expenses for which PPP funds can be used. This applies to both new loans and existing loans for which a forgiveness application has not been filed. Qualified expenses now include certain operations expenditures, property damage costs not covered by insurance, certain supplier costs, and certain worker protection expenditures.
  • EIDL Advances will no longer reduce PPP loan forgiveness. The SBA has indicated borrowers that already received forgiveness and had their EIDL Advance deducted from such forgiveness may be able to amend their forgiveness application. We expect further guidance to be issued on this.
  • Forgiveness applications for loans under $150,000 will be simplified to a one-page certification. We expect further guidance to be issued for this.

Paycheck Protection Program (“PPP”) – Round 2

  • Business with less than 300 employees who also saw a decrease in revenue of at least 25% in any quarter during 2020 when compared to the same quarter in 2019 may be eligible for a second PPP loan. Similar to the original PPP program, we expect the Treasury and SBA will issue additional guidance before applications become available.

Payroll Tax Issues

  • Certain credits established with the first stimulus package (FFCRA) have been extended through March 31, 2021.
  • Employee payroll tax deferral repayment has been extended from April 30, 2021 until December 31, 2021.
  • Employee retention credit has been extended through July 1, 2021. The credit percentage is increased from 50% to 70% of qualified wages paid from January 2021 through June 2021. Effective January 1, 2021 business with a gross receipts reduction of at least 20% (decreased from 50%) will qualify for the credit. In addition, qualified wages have been increased from $10,000 per employee to $10,000 per quarter per employee.

Stimulus Checks

  • Eligible taxpayers will receive a second stimulus check for up to $600 per person. Individuals with up $75,000 in adjusted gross income ($150,000 for married couples filing joint) will receive the full payment.
  • The IRS is required to stop sending checks on January 15. If you don’t receive your check you will need to claim all or part of the missing amount when you file your 2020 federal income tax return through the Recovery Rebate Credit.
  • President Trump has called for increased payments. Monday, December 28, the House passed legislation which would increase these payments to $2,000 per person for qualified households. At the time of this article it is unclear whether the Senate will vote on the House-passed bill.

Federal Unemployment Insurance

  • The package includes an additional $300 per week in federal unemployment benefits for 11 weeks. Due to the delay in signing, we expect people to see a lapse in these payments as states reprogram their computer systems to reflect this update.

The larger annual spending package also allows for 100% deduction for restaurant meals in 2021 and 2022 and included an extension to various expiring tax provisions, including 179D, the New Markets Credit, the Work Opportunity Credit and various energy credits, among others.

Contact Us

As additional guidance is issued on the above issues, we will be sure to keep you informed. For additional information, call us at 248.208.8860 or click here to contact us. We look forward to speaking with you soon.

Our team is always ready to help.

Please contact us for more information.

Sarah Russell

Shareholder, Tax

Contact Sarah   |   Read Sarah's bio

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Read full story

PPP Loan Round 2 – Should You Apply?

A new round of PPP loans (PPP2) was ushered in with the passage of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) on December…

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COVID-19 Stimulus Bill

Posted by Sarah Russell on December 29, 2020

Sarah Russell

After a surprising delay, on Sunday, December 27 President Trump signed the $900 billion COVID relief bill which was part of the larger annual federal spending package. Below is a summary of the highlights included in the Stimulus portion of the bill.

Changes to the Original Paycheck Protection Program (“PPP”)

  • Expenses paid with forgiven PPP funds are now deductible. This is a material, and welcome, change from existing IRS guidance.
  • Borrowers are now able to choose their own covered period if it is at least 8 weeks and not longer than 24 weeks. This provides a slight change to the current loan forgiveness application and provides borrowers with more control over how to handle potential workforce reductions.
  • Congress expanded the types of expenses for which PPP funds can be used. This applies to both new loans and existing loans for which a forgiveness application has not been filed. Qualified expenses now include certain operations expenditures, property damage costs not covered by insurance, certain supplier costs, and certain worker protection expenditures.
  • EIDL Advances will no longer reduce PPP loan forgiveness. The SBA has indicated borrowers that already received forgiveness and had their EIDL Advance deducted from such forgiveness may be able to amend their forgiveness application. We expect further guidance to be issued on this.
  • Forgiveness applications for loans under $150,000 will be simplified to a one-page certification. We expect further guidance to be issued for this.

Paycheck Protection Program (“PPP”) – Round 2

  • Business with less than 300 employees who also saw a decrease in revenue of at least 25% in any quarter during 2020 when compared to the same quarter in 2019 may be eligible for a second PPP loan. Similar to the original PPP program, we expect the Treasury and SBA will issue additional guidance before applications become available.

Payroll Tax Issues

  • Certain credits established with the first stimulus package (FFCRA) have been extended through March 31, 2021.
  • Employee payroll tax deferral repayment has been extended from April 30, 2021 until December 31, 2021.
  • Employee retention credit has been extended through July 1, 2021. The credit percentage is increased from 50% to 70% of qualified wages paid from January 2021 through June 2021. Effective January 1, 2021 business with a gross receipts reduction of at least 20% (decreased from 50%) will qualify for the credit. In addition, qualified wages have been increased from $10,000 per employee to $10,000 per quarter per employee.

Stimulus Checks

  • Eligible taxpayers will receive a second stimulus check for up to $600 per person. Individuals with up $75,000 in adjusted gross income ($150,000 for married couples filing joint) will receive the full payment.
  • The IRS is required to stop sending checks on January 15. If you don’t receive your check you will need to claim all or part of the missing amount when you file your 2020 federal income tax return through the Recovery Rebate Credit.
  • President Trump has called for increased payments. Monday, December 28, the House passed legislation which would increase these payments to $2,000 per person for qualified households. At the time of this article it is unclear whether the Senate will vote on the House-passed bill.

Federal Unemployment Insurance

  • The package includes an additional $300 per week in federal unemployment benefits for 11 weeks. Due to the delay in signing, we expect people to see a lapse in these payments as states reprogram their computer systems to reflect this update.

The larger annual spending package also allows for 100% deduction for restaurant meals in 2021 and 2022 and included an extension to various expiring tax provisions, including 179D, the New Markets Credit, the Work Opportunity Credit and various energy credits, among others.

Contact Us

As additional guidance is issued on the above issues, we will be sure to keep you informed. For additional information, call us at 248.208.8860 or click here to contact us. We look forward to speaking with you soon.

Our team is always ready to help.

Please contact us for more information.

Sarah Russell

Shareholder, Tax

Contact Sarah   |   Read Sarah's bio

related news

Are Foreign-Owned or Controlled Companies Eligible for a PPP 2.0 Loan?

The persistence of the COVID-19 pandemic has created challenging business conditions in Michigan and across the U.S. The second wave of infections has forced many state and local government agencies…

Read full story

PPP Loan Round 2 – Should You Apply?

A new round of PPP loans (PPP2) was ushered in with the passage of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) on December…

Read full story

Understanding Transactions, Even if Your Business Isn’t for Sale

Selling your small business may not have been your focus in 2020 and may not be your focus in 2021. With an economy in flux and public health at the…

Read full story

State and Local Tax Planning: What You Need to Know

In a world that is becoming more global, many companies have focused their resources on dealing with new international markets. While important, it is also imperative businesses do not take…

Read full story

Welcome 2021

Happy New year! At the end of most years, I ask myself – where did the year go? But not so this year. The end simply couldn’t come quick enough.…

Read full story

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