As a follow-up to our blog post: New Coronavirus Stimulus Bill Passes Congress with PPP Loan Updates and Tax Implications, and our article related to the Impact of the Stimulus Bill for Individuals, Former President Trump signed the aid package bill late on December 27.

  • A $600 check to many Americans. The phase-out begins for those earning $75,000 annually and disappears at $99,000.The amount is reduced by $5 for every $100 in additional income. If your 2019 income makes you ineligible but you made a lot less in 2020, you still may be eligible for the money in the form of a refundable tax credit.
  • Additional unemployment benefits of $300 a week, lasting through mid-March.
  • Additional benefits for freelancers and gig workers.
  • A tax credit for employers offering paid sick leave.
  • $284 billion for businesses and revival of the Paycheck Protection Program, which ended some months ago.
  • Businesses that received PPP loans and had them forgiven faced tax confusion. The new bill will make it clear such businesses will be allowed to deduct the costs covered by those loans.
  • Breaks for renters and homeowners: $25 billion in rental relief and an extension of the eviction moratorium through Jan. 31, 2021.
  • A ban on surprise medical bills, which sometimes occur when a patient unexpectedly gets care outside of a network. Going forward, insurance companies will have to work these out with providers.
  • Additional protections and aid for bankruptcy filers.
  • Mortgage forbearance–temporarily reducing or pausing payments for 180 days.

One of the smallest provisions is also one of the most divisive: the return of the 100% deduction of the so-called three-martini lunch — that is, an increased tax break for business lunches, which are currently at 50%. This applies to restaurant and takeout meals paid for in 2021 and 2022, according to analysis from Forbes, and is not retroactive.

According to the SHRM, key employer provisions include:

  • The ability for workers to roll over unused funds in their health and dependent care flexible spending accounts.
  • The expansion of employer-provided education assistance to include student loan repayment.
  • Employer tax credits for paid family and medical leave.
  • An extension of the employee retention tax credit.
  • Delays in deferred payroll tax payments.

What’s Out:

Several heavily debated items are off the table, although they may appear in bills in the near future. Their elimination was part of a series of compromises:

  • No aid for state and local governments, which Democrats had pushed for.
  • No liability protections for businesses, which Republicans had wanted.
  • No checks for adult dependents.
  • No hazard pay for essential workers.

Although the bill is now law, it may take a while before all the details become clear. The IRS and other government departments will likely offer additional guidance, and again, we will  have more on the law’s provisions.

As we have been doing with all coronavirus legislation and IRS and SBA guidance during these past several months, we will be sure to update you with any additional insight as soon as possible. Continue to check back here for the most up to date tax information and changes in response to coronavirus. If you have questions about this or related topics contact an MCB Advisor at 703-218-3600 or click here. 

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