Congress approved the second longest piece of legislation ever written. President Trump signed the $900 billion stimulus bill into law. If you are interested in applying for the second PPP loans, its better if you have your accountant involved to avoid delays.
Here is what’s in the bill
Direct stimulus checks
- The legislation includes $600 stimulus checks per person, including adults and children. That means a family of four would receive $2,400, up to a certain income threshold.
- The size of the payment decreases for people who earned more than $75,000 in the 2019 tax year. The check disappears altogether for those who earned more than $99,000.
- The bill does not extend stimulus checks to adult dependents.
Jobless benefits
- Congress will extend unemployment benefits of up to $300 per week. Because of the delay in signing this bill, unemployment benefit might be delayed for some. The extension runs at least through March 14, 2021.
- The bill also extends unemployment for part-time and gig workers who did not qualify for state unemployment insurance benefits — for 11 weeks. The new legislation requires applicants to provide documentation proving employment or self-employment.
Second-draw PPP loans
The PPP has been given new life, meaning certain business can apply for a second loan, though the terms have changed.
To be eligible, a business must:
- Have no more than 300 employees with not less than 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 compared to same quarter in 2019. Applications that are submitted after January 1, 2021 may qualify with a 25 percent reduction in gross receipts in the fourth quarter of 2020 compared to the fourth quarter in 2019.
- Have received and used the full amount of the first PPP loan.
- The bill includes more than $284 billion for first and second forgivable Paycheck Protection Program loans.
- Expanded PPP eligibility for nonprofit organizations.
- The language ensures that churches and faith-based organizations are eligible for PPP loans.
- The deal includes $20 billion for targeted grants through the Economic Injury Disaster Loans program.
- Forgiveness applications have been simplified to include a one-page application for loans up to $150,000 and a three-year record-keeping requirement. Payroll costs include everything we thought, but the legislation clarified that group insurance costs are included.
- The covered period is now any period between 8 weeks and 24 weeks (instead of 8 weeks or 24 weeks).
Other tax changes
Payroll tax payments have been deferred to April 30, 2021. Keep in mind that this is not a forgiveness so people will have to pay this.
- New payroll credits for paid sick and family leave have been extended out to March 31, 2021.
- Educator expense deduction may now include disinfectant, PPE, and the like.
President-elect Biden said that “this is a down payment on a larger bill”. We will send updates as new information becomes available.
