(updated 3/20/2021)

3rd Stimulus Package (3/11/2021):

A 3rd Stimulus Package has been passed.  The most notable items that you will want to know about for the immediate future are the following:

  • $1400 stimulus check for each individual with income < $75,000 ($150,000 for married couple filing jointly "MFJ"), including dependents of all ages.  This amount begins to phase out for those above $75k single / $150k MFJ & is fully phased out (you don't receive a check) after $80k single / $160k MFJ.  You can check the website for more information.
  • 2020 Unemployment Income is exempted from tax for the 1st $10,200 if your income is < $150,000 in 2020 (or the 1st $20,400 for married people filing jointly).  The IRS will automatically process the refunds for those taxpayers who have already filed their tax returns with unemployment income who are affected by this retroactive change.


$900 Billion Stimulus Package (12/22/2020):

On 12/21/2020, Congress passed another $900 billion stimulus package with a veto-proof majority.  Included in its 5700+ pages were the following:
  •  $600 stimulus checks for each adult & child but with the same income thresholds as in the previous CARES Act
  • Congress will extend unemployment benefits of up to $300 per week (as compared to the $600 benefits through the CARES Act). The benefit could begin as soon as Dec. 27 and run at least through March 14
  • More PPP Loans 
  • More EIDL loans
  • Businesses that received PPP or EIDL loans and had them forgiven will be allowed to deduct the expenses covered by those loans on their federal tax returns.  Prior to this legislation, the IRS made clear in Notice 20-32 (see below) that the expenses paid for by these forgiven loans would not be deductible.
  • Meals Deduction. The deduction for business meals jumps from 50% to 100%. This applies only for 2021 and 2022.
  • Charitable Contribution Deduction. The deduction for charitable contributions from the CARES Act applied only to 2020. This bill will be extended to 2021. The non-itemizer deduction of $300 ($600 for married couples) applies in 2021, and the higher limitations for individuals and businesses also applies.


Tax Effect of PPP & EIDL Forgiveness (12/9/2020):

(this is REVERSED with the new Stimulus Package on 12/21/2020 (above) but has been left here for reference) 

If you applied through your business for either the Paycheck Protection Program Loan ("PPP") or Economic Injury Disaster Loan ("EIDL") and any part of those loans were or will be forgiven, then it may come as a surprise that the forgiven portion will become, in essence, taxable income for 2020.  

It has been determined by the IRS (see Notice 20-32 (pdf download)) that, although the forgiven loan itself is not taxable, the portion of the expenses that the forgiven loan paid for are not tax deductible.  So it has the same effect as the forgiven portion of the loan being taxable.

If you have applied for forgiveness (or plan to) but will not know the amount forgiven until after the tax returns for 2020 are due, you may need to consider filing an extension.  Otherwise, if you file without the correct amount, you will need to amend your 2020 returns.

$2 Trillion Stimulus Package:

A massive stimulus package was signed into law on 3/27/2020 to aid American workers and businesses during the COVID 19 pandemic.  It includes several parts, including: 
Direct payments to individuals:
  • $1200 direct payment to each adult filing single whose Adjusted Gross Income (AGI) was less than $75k for the 2019 year (or 2018, if 2019 has not been filed yet).  Married filing jointly, $2400 if the total AGI was less than $150k.  Heads of Household, $1200 if AGI less than $112,500.
  • Payments will be reduced by $5 per every $100 that the AGI is over those thresholds.
  • And additional $500 per dependent child under 17, regardless of income. 
  • If the IRS has your bank account number from the prior tax return, they will directly deposit the stimulus payment to that bank account.  Otherwise, the check will be mailed to your last known address.
    Expanded Unemployment Insurance:
    • Regular unemployment allowed for up to 39 weeks instead of just 26 weeks
    • Benefits increased by $600/week on top of what states' unemployment benefits pay, lasting 4 months
    • Now includes self-employed people & furloughed employees
    Emergency SBA Loans for Small Businesses "Paycheck Protection Loan":
    • Apply through your bank but backed by the SBA.  Available through end of June 2020.
    • No collateral needed.  No fees.  Interest capped at 4%
    • Loans limited to $10 million & to businesses with 500 employees or less; Loans calculated as 2.5 times your average 2019 monthly payroll (including salary, wages, healthcare benefits, and paid sick leave)
    • If all employees are kept on payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100 percent of the loan is forgivable.
    • If you've recently laid off workers, you would be required to repay a larger portion of the loan, and loans covering salaries of over $100,000 a year wouldn’t qualify for forgiveness.
    Other SBA Assistance:
    • Economic Injury Disaster Loans & Loan Advance
    • SBA Debt Relief
    • SBA Express Bridge Loans