You could soon see or already have another stimulus payment in your bank account with the recent passage of the Emergency Coronavirus Relief Act of 2020, which could mean more direct relief to you and your family. Here are some of the major points you need to know that are buried inside this 5,000+ page, $900 billion piece of legislation.
Direct payments to you
The legislation includes a $600 payment per person, including adults and your dependent children. Payments are based on your 2019 income tax and should start being distributed shortly after Christmas, per Treasury Secretary Mnuchin. As with the original payments, the payment amount phases out for incomes over $75,000 for single taxpayers and $150,000 for married couples.
Things to consider:
If your income is too high in 2019, but you become eligible based on 2020 income, you will have an opportunity to request the funds on your tax return.
Unlike the first round of stimulus payments in 2020, if you have someone in your household that is ineligible, you can still get payments for those individuals that are eligible. This was a problem with the first round of payments.
If the number of adults or dependents in your household changed during the year, you will need to keep track of this and be prepared to issue corrections to ensure you receive the correct payment amount.
While specifics are in flux, the payment mechanism in place for the initial payments in the spring should help facilitate distributions of this second round of direct stimulus payments.
Extension of unemployment benefits
Federal unemployment benefits of up to $300 per week will be extended through March 14. The benefits programs for self-employed and gig workers, which was set to expire at the end of 2020, was also extended.
Things to consider:
If you have not already done so, you must file for unemployment with your state as soon as possible. State offices and websites are being slammed, so the sooner you get in the queue the better for you and your loved ones.
Remember, these benefits also apply to self-employed and part-time employees. Many workers who were eligible for this unemployment earlier in 2020 did not file because this class of workers is typically not eligible for most state unemployment programs.
Deductibility of expenses paid with PPP loans
Businesses that received PPP loans and had them subsequently forgiven will be permitted to deduct the expenses covered by those loans on their federal tax returns. Much to the chagrin of the IRS, the recent bill clarifies that PPP loan forgiveness now means no tax impact due to the forgiveness. For example, if you used $100,000 of payroll in your application to get your loan forgiven, you can still deduct the payroll as an expense on your tax return.
New PPP loan funds
There is additional money available from the Small Business Association (SBA) for a new round of PPP loans. The new loan program is targeted to businesses that need the funds. To qualify, your business must have 300 or fewer employees and have seen a drop in revenue of 30% or more during any quarter in 2020. Some of the money is earmarked for very small borrowers, underserved communities, and small lenders. There are even simplified requirements for forgiveness if the loan amount being applied for is less than $150,000.
Eviction moratoriums and rent assistance
The bill extends until January 31, 2021 a moratorium on evictions that was scheduled to expire at the end of 2020. The bill also includes $25 billion in emergency assistance to renters.