- Stimulus checks have been delivered based on 2019 tax returns, $600/person
- Business owners should review their ability to claim an Employee Retention Credit
- Unemployment adds $300/week extra to Mar 14; eviction moratorium now to Jan 31
The most overused word of 2020 was unprecedented. Congress was anything but when it went down to the wire before Christmas, passing a massive piece of legislation including $900 billion in COVID-19 stimulus relief. The Consolidated Appropriations Act of 2021 combined pandemic relief with a dozen appropriations bills and was signed into law on December 27. Here are some takeaways that may affect our clients in 2021 and beyond.
Stimulus Checks: This bill signed on Dec 27 funds $600/person stimulus checks, for households with AGI below $150,000 in 2019. This confused could be forgiven as the amount was up for debate up until signing and new discourse began immediately regarding the possibility of a vote on another $2,000. As it stands, many of these $600 payments, per person including children, have been directly deposited into taxpayers’ bank accounts. It should be noted that these are structured as advance refunds of tax credits against the 2020 tax and are limited based on AGI. This means that changes to your situation since you filed 2019 tax are not taken into account. Unfortunately, if you qualify for more because you had a child or your income is down, perhaps due to not taking IRA Required Minimum Distributions, you will need to wait and settle up when you file your 2020 tax return.
Employee Retention Credit & PPP: This is a significant change for employers and those affected should seek tax advice. Last year’s CARES Act created a payroll tax credit against employer Social Security wages for employers who showed receipts down 50% YOY in any quarter due to COVID-19. However, it included a provision that employers who received a Payroll Protection Program loan could not claim this credit as well. This new bill eliminates that restriction retroactively, reduces the requirement to a 20% reduction in receipts, and expands the wages that can be taken into account. In our experience, many employers elected to utilize a PPP loan instead of the employee retention credit. Those employers who did so and saw sales drop in Q2 should explore these changes with their CPA.
Unemployment: Expanded federal unemployment benefits of $300/week will last ten weeks until March 14.
Eviction Moratorium: Extended through Jan 31 for tenants with incomes below $99,000.
No Surprises Act: Beginning in 2022, out-of-network providers must negotiate with insurers rather than directly billing patients, among others targeting patient protection.
Business Meal Deduction: Restaurant meals will be deductible for businesses from 2020-2022.
FAFSA Simplification: The Free Application for Federal Student Aid will be reduced from 108 questions to approximately three dozen, and new limits were codified on asset & income protection for students and parents. This will need to be digested but may amplify differences in aid packages between public universities using the FAFSA and private institutions that use the CSS profile. Our advice is that students hoping to receive aid should consider at least one school relying on the FAFSA.
SOURCE:
Consolidated Appropriations Act, 2021
https://www.congress.gov/bill/116th-congress/house-bill/133/text
