Around this time last year, I was writing a newsletter article and whitepaper about The SECURE Act. This time around, we have yet another bill passed during the last week of the year with tons of information.
The official name of the stimulus bill that was signed into law is, The Consolidated Appropriations Act, 2021.
The provisions are directed mostly at businesses. However, there are a few provisions a lot of the population may benefit from, regardless if they own a business or not.
First and foremost, the Recovery Rebate. This is the direct payment provided by the government commonly referred to in the news as, your “stimulus check.” Household members receive $600 dollars each, including dependents. That amount is “phased out” or reduced when Adjusted Gross Income exceeds $75,000 for single filers and $150,000 for those who file jointly. The checks are issued as a refundable tax credit. Like the CARES Act in the Spring, the amount you receive is not taxed.
Unemployment benefits are extended another eleven weeks, and payments were increased this time around by $300. The waiting week, which normally does not qualify for benefit, is once again allowed to qualify so people can receive their benefits sooner.
A few significant items for businesses are the deductibility of expenses paid for with PPP loan proceeds and a temporary 100% deduction for business meal expenses.
Prior to this new law, business expenses paid for with Paycheck Protection Program Loan proceeds were not deductible. This was not a favorable treatment for a lot of business owners who base their planning on expenses incurred annually, no matter where the money is coming from. After a lot of back and forth, Congress decided to allow the deduction.
Also, for the years 2021 and 2022 only, business can fully deduct meal expenses provided by restaurants. This likely got through with the argument that it will help restaurants hit extremely hard during the COVID pandemic. There’s a lot more in this bill. So much, that we decided to record a podcast https://scientific-twig.flywheelsites.com/podcast/ as well as a detailed presentation about it.
As always, if there are specific questions you have about this bill and how it could impact you, please reach out to us. We will continue to dig through this and future legislation to bring you unique value and insights.
Sources: Thomson Reuters/Tax & Accounting
Casey Pisano, CFP®