As the Consolidated Appropriations Act, 2021 (CAA, 2021 or the Act), the appropriations bill that includes emergency Covid-19 response and relief, has now been signed into law, we want to share a few relevant updates.
Paycheck Protection Program (PPP)
Business expenses paid with Payroll Protection Program (PPP) loans that will be forgiven are now fully tax-deductible. Additionally, forgiveness will not be considered taxable income.
There is also now a simplified forgiveness application process for loans up to $150,000. All that is needed is a one-page certification submitted to your lender including the number of employees that were retained because of the program, estimated total amount spent on payroll, and total loan amount.
Finally, even if you had received a loan previously, you may be eligible to receive another one up to $2 million if you meet certain requirements. A business may be eligible if it has 300 or fewer employees, has used or will use the full amount of the previous loan, and can show 25% gross revenue decline for any 2020 quarter compared to the same one from 2019 (i.e. Q2 2020 gross revenue is 28% lower than Q2 2019).
The Act provides guidance for both 2020 and 2021 in regards to charitable contributions for individuals who use either the standard deduction or itemize.
Non-itemizers who plan to take the standard deduction will qualify for a $300 ($600 if married filing jointly) “above-the-line” deduction for these two tax years for cash contributions made to qualified charities.
Those who itemize their deductions have previously been limited to a deduction on cash contributions made to 50% charities of 60% of their contribution base. However, for these two tax years, this 60% limit will not apply.
Meals & Entertainment
CAA, 2021 provides a break for business expenses related to meals and entertainment. While there has generally been a 50% tax-deductible limit on some of these expenses, that will not apply for expenses for food and beverages provided by a restaurant between 12/31/2020 and 01/01/2023. Essentially, 100% of these expenses will be deductible for tax years 2021 and 2022 for calendar-year filers.
Please reach out to your Siegfried Advisory Relationship Coordinator if you would like to discuss these or any other updates.
The Siegfried Advisory Team