A much anticipated Christmas gift…
On Monday, December 21, 2020, Congress passed the $2.3T Consolidated Appropriations Act, 2021, (CAA) – $900B for Covid-19 Relief & $1.4T to fund the Government. The 5,593 page Bill, is believed to be the largest spending bill ever considered by Congress! President Trump is expected to sign it into law sometime before December 28, 2020.
Focusing on the Covid-19 Relief provisions of the Bill, below are a few highlights:
- Tax deduction for expenses paid with forgiven Paycheck Protection Program Loan (PPP Loan)
- No deduction required for EIDL advance from PPP forgiveness amount
- Simplified Forgiveness Application for loans under $150K
- Choose “covered period” for PPP forgiveness to end anytime between 8 to 24 weeks
- $284B in aid for Small Businesses through the Paycheck Protection Program (2nd Round of PPP)
- $300/week Federal supplement unemployment benefits extended for 11 weeks
- $600/person in 2nd “Stimulus Check”
- Extension of Deferred Payroll Taxes
- Extension & Improvement of Employee Retention Tax Credit
Other tax related provisions include:
- 100% deduction for business meals provided by restaurants, for 2021 & 2022
- Earned Income Tax Credit & Child Tax Credit based on 2019 income (optional)
- Maximum above-the-line adjustment for charitable giving changed from $300 “per return” to $600 for a “joint return” for 2021
- Charitable contribution deduction up to 100% of Adjusted Gross Income, for 2020 & 2021
- Medical expense deduction floor permanently moved to 7.5% of Adjusted Gross Income, beginning in 2021
For more information, please click to view Journal of Accountancy article
In the next few days, as we learn more, HM&M will share updates, guidance, and clarifications as they are released.
If you have questions, please contact your HM&M tax advisor.
For more information check out HM&M’s COVID-19 Resources page.
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