The $900 billion COVID-19 Stimulus package, which has not yet been signed into law, is over 5,000 pages in length and one of the largest bills in our nation’s history. Included in the bill are many items unrelated to pandemic relief, but there are some important updates regarding the Paycheck Protection Program (PPP) and tax provisions.
As with the first stimulus bill, this hefty piece of legislation includes grey areas that will likely be cleared up through additional guidance. We will follow up with information and clarifications as they are available. In the meantime, however, there are some important details you will want to know.
If you want to read the bill, you can find it here.
Paycheck Protection Program (PPP) Updates
The PPP was infused with $284 billion to fund additional forgivable loans, which are not included in taxable income. You can also deduct expenses that were paid with your forgiven PPP loan with no restrictions. Companies that are considered “hard hit” by the pandemic qualify for a second round of PPP money. Small organizations and non-profits with 300 or fewer employees that can show a 25% loss of gross receipts during any quarter of 2020, when compared to 2019, which totals 2.5 times the average monthly payroll up to $2 million, fall into this category and are allowed additional PPP funds.
The bill makes some new types of businesses eligible for PPP loans, including hospitals, local newspapers and broadcasters (TV and radio), local chamber of commerce and other “promotion” organizations and 501(c)(6). There are some exceptions to this eligibility tied to how much money such organizations receive from lobbying.
Also included in the bill is $20 billion for Economic Injury Disaster Loan (EIDL) grants, $3.5 billion for SBA debt relief and $2 billion for enhancements to SBA lending.
$286 Billion in Stimulus Checks and Unemployment
The bill includes a temporary $300 a week in Federal Pandemic Unemployment Compensation (FPUC), currently set to end on March 14, 2021. It also funded direct stimulus payments (stimulus checks) of $600 for individuals making up to $75,000 annually, or couples making up to $150,000 annually with an additional $600 per each dependent child.
Stimulus check amounts vary based on income, so the size of the check is reduced for those with reported earnings over $75,000 and tops out at $99,000. This means a family of four could receive up to $2,400 if they qualify. This amount depends upon them meeting all qualifying factors to receive the maximum allowed amount. Those eligible to receive a stimulus check could see it in a couple of weeks if they have direct deposit on file with the IRS. Paper checks will take a bit longer to distribute and there isn’t any set date for release.
Remember, stimulus check payments are based on your most recently filed tax return. This stimulus calculator can help estimate what your household might qualify to receive.
Tax provisions included in the stimulus bill
The Employee Retention Tax Credit (ERTC) has been expanded through July 1, 2021, including some clarifications and addition to the original provision:
- Increased credit rate from 50% to 70%.
- Increases per-employee creditable wages to $10,000 per quarter.
- Makes it easier to get the credit by lowering the limit for declining YoY gross receipts from 50% to 20%.
- Changes the definition of “large employer” for determining the qualified wage based by 100. This applies to organizations with 500 or less employees.
There are also some less defined areas of the bill, including what employers are required and permitted to do regarding emergency paid sick leave or emergency paid Family and Medical Act Leave under the Families First Coronavirus Response Act (FFCRA), which expires December 31st, 2020.
Just like the first stimulus bill, there is likely to be upcoming clarification and additional guidance on how things are interpreted. As always, we are watching this develop and will provide you with as much information as possible, as we have more details.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.