THIS RELIEF PACKAGE IS BEING SENT TO PRESIDENT TRUMP TO SIGN BUT HE HAS INDICATED HIS DISPLEASURE WITH THE PACKAGE AND IT IS UNCLEAR AT THIS TIME IF & WHEN HE WILL SIGN THIS LEGISLATION INTO LAW.
The $900 billion pandemic relief package (COVID-related Tax Relief Act of 2020 or COVIDTRA) will finally deliver long-sought cash to businesses and individuals and resources to vaccinate Americans in the fight against the COVID-19 pandemic. This relief package is tied to the $1.4 trillion resolution (Consolidated Appropriations Act of 2021 or CAA, 2021) to fund the government through its fiscal year, September 2021.
Included in the nearly 5,600-page CAA, 2021, the package expands and extends several critical provisions of the Coronavirus Aid, Relief, and Economic Security (CARES Act) enacted in the spring of 2020 to deal with the emerging financial and health care crisis. The final bill includes neither the funding for state and local governments that Democrats sought nor the corporate liability protection from COVID-19-related lawsuits that Republicans favored.
Key provisions for individuals, businesses, and employers
Here’s a broad overview of some of the provisions that may affect you:
- Additional payments (new recovery rebates) of $600 to individuals making up to $75,000 per year and $1,200 per married couple filing jointly earning up to $150,000 per year (based on 2019 tax returns) — with payments phased out at a rate of $5 per $100 of additional income respectively plus $600 for each dependent child under the age of 17;
- An additional $300 per week in unemployment benefits, including for the self-employed, gig-economy workers and others in nontraditional employment, through March 14, 2021, with the maximum period for state-paid benefits extended to 50 weeks;
- An extended eviction moratorium;
- Federal rental assistance for families affected by COVID-19, applicable to past due rent, future rent payments, and utility and energy bills;
- Clarification that money purchase pension plans are included among the retirement plans subject to temporary relief measures under the CARES Act (for example, waiver of penalties on COVID-19-related early distributions);
- Special temporary rule allows for some taxpayers to use earned income from 2019 providing larger Earned Income Tax Credits and Child Tax Credits;
- Loosened requirements for medical expense deductions beginning in 2021;
- Extended certain charitable contribution tax deductions of non-itemizers up to $300 for individuals and $600 for married filing jointly through 2021;
- Extended increased limitation for charitable cash contributions to a public charity from 60% to 100% through 2021.
- An extended exclusion for certain employer payments of student loans; and
- New rules for disaster-related distributions from retirement plans.
Businesses and other employers
- New funding for first-time and a second round of forgivable loans to eligible businesses under the Paycheck Protection Program (PPP), with dedicated set-asides for very small businesses and lending through community-based financial institutions;
- Expanded PPP-eligible expenses (for example, certain operating expenses, property damage costs, supplier costs and worker protection expenses);
- Expanded PPP eligibility for nonprofits, local newspapers, and TV and radio broadcasters;
- Clarification that expenses paid from PPP loans are completely tax deductible
- Streamlined forgiveness of PPP loans of less than $150,000 and provides for other financial assistance under COVID-19 legislation;
- New targeted Economic Injury Disaster Loan (EIDL) grants from the Small Business Administration (SBA) for businesses in low-income communities;
- Continued SBA debt relief payments for an additional three months (not on a PPP loan);
- Dedicated funding for live venues, independent movie theaters and cultural institutions;
- An extended and greatly expanded Employee Retention Credit (ERC) for eligible employers that continue to pay employee wages during COVID-19 closures or after experiencing reduced revenue through July 1, 2021;
- Extended the Families First Coronavirus Response Act (FFCRA) tax credits for paid sick and family leave through March 31, 2021;
- Extended mandatory paid sick and family leave for qualifying COVID-19-related reasons;
- 100% business meals tax deduction in 2021 and 2022 for restaurant meals provided certain other requirements are met;
- Aid to farmers and ranchers;
- Enhanced Low Income Housing Tax Credit;
- Depreciation of certain residential rental property over 30 years rather than 40 years for taxpayers who elect out of the interest limitation rules of Section 163(j):
- Extended repayment period for employee payroll tax deferral until December 31, 2021; and
- Extended Work Opportunity Tax Credit, New Markets Tax Credit and Empowerment Zone tax incentives through the end of 2025
Additional details to come
This is just a quick look at the latest COVID-19 aid package. For the complete text of CAA, 2021, go here. Expect more relief once President Biden and his administration take office in 2021.We’ll continue to give you updates into the provisions most likely to affect you or your business in the near future. In the meantime, please contact us with any questions or concerns about these new tax provisions affecting your individual financial or business situations.
We’re here to help.
In the meantime, visit a special section on our website COVID-19 Tax & Business Implications.