Well, I do not know what would be more 2020 than a last-minute legislative action that would change some of our carefully planned yearend tax strategies. Senators on both sides of the aisle are working tirelessly to get this passed before the holiday.
The bill is broken up into two pieces – both of which are being negotiated together as if it was one large piece of legislation. Let’s break down some of the proposals on the table and where to read more.
On the business tax side, we have all been planning for nondeductible expenses if they were paid with PPP funds. There is a provision in the draft bill that would make these expenses deductible. I know every one of my clients that got a PPP loan will let out a big sigh of relief when this passes. There is additional funding for the PPP loans as well to continue the program for struggling small businesses, which includes a provision of a 30% reduction in revenue to qualify.
On the individual side – we are expecting additional stimulus checks to lower income taxpayers which is predicted to be around $600/person. There is money set aside for a rental assistance program to keep people in their homes. There is not clear information on how that money would be accessed by the general public. They are also negotiating a provision to provide additional assistance for unemployed individuals. Here is a good summary and where we stand with the bill from CNN: Hill leaders eye new round of stimulus checks as part of $900 billion Covid relief deal.
Some key pieces that are less relevant to use on the business side (but still relevant as we are humans) are as follows. There is money set aside for state and local governments that are hitting budget shortfalls to keep local communities alright. They have allocated funds for schools to handle pandemic related issues. And they have budgeted funds to assist with vaccine distribution.
Here is an article summarizing the provisions that I enjoyed from the NYT: $900 Billion Pandemic Relief Deal Takes Shape.