What to Expect When you're Expecting COVID Relief
If you’ve been at all following the news, you’ve likely heard that Congress has finally agreed to a new COVID relief package that was signed by President Trump.
As we have been following the news this past week I have written, deleted, and rewritten this blog at least 4 times, trying to keep up with all the changes. Now that Trump has signed the bill I am posting this blog with the items that are most likely to affect you in 2021.
The main thing that everyone has been waiting to hear about.
The eligibility guidelines appear the same, but the dollar amounts have changed. Instead of $1200 for an individual or $2400 for a married couple the stimulus will be $600 per person. The per person amount also covers children. So, while the $1200 people got initially has been cut in half, the $500 that people got in the first round for a dependent has been increased by $100. These payments are also expected to show up fast. With the first round some people waited months. Since the system is already in place, Secretary Mnuchin said they may begin distributing payments as early as next week.
We will also be seeing a return of the enhanced unemployment payments. Over the summer people who were claiming unemployment from March through the end of July we are receiving an extra $600 per week as part of their benefits. What will be coming back is going to be an additional $300 per week for people claiming unemployment benefits.
An additional round of funding for the PPP program is also part of the stimulus bill. The original program stopped taking applications at the beginning of August. Once this is in place first-, and second-time borrowers will have an opportunity to get a loan if they meet certain conditions. The bill is also supposed to include streamline procedures for forgiveness of loans under $150,000. One aspect of the PPP program that I have talked about both on here and during radio interviews is the deductibility of expenses that were paid for with PPP funds. Since April, the IRS has taken the position that those expenses would not be deductible. Many others and I believe that the IRS is wrong about this. We believe that it is both against the intent of Congress and opposed to the actual wording of the legislation. If the IRS were always right about everything then we wouldn’t have a tax court. Not only would we not have a tax court, but the IRS wouldn’t lose as often as they do at tax court. There may be some restrictions in place, so will need to wait for the final bill to know how this is going to be implemented. But there should be a provision in there about deducting expenses paid for with forgiven keeping your funds.
$2,000 One Time Payments?
The House is voting today on the hotly debated $2,000 stimulus payments- which is predicted to be blocked in the Senate. We will keep you posted as things move forward with this.
Joseph Orabona III, EA
576 Elm St.
Windsor Locks, CT 06096