$100 bill pulled apart as a puzzle piece

How Does the Consolidated Appropriations Act Affect You?

The Consolidated Appropriations Act 2021 is expected to be signed by President Trump today. There are key provisions for both individuals and businesses.

This is a 5,600-page document so it will take some time to provide all the details but the following is what has been released so far:

For Individuals: The full credit is $600 per individual, $1,200 per couple, and $600 for children. Children 17 and older are not eligible for the credit. There are income limits as in the first round of payments.

Payments are expected to start early next week. If you have not received the first payment or it was incorrect, you will be able to receive this on your 2020 tax return filing.

If you do not receive the second payment or it is an incorrect amount, you can claim this on your 2020 tax filing. For example, if a family has a child born in 2020 the additional $600 will not be included in the next round of payments. This amount will be claimed as a credit when filing the 2020 tax return.

Unemployment assistance is extended by 16 weeks. Supplemental federal unemployment benefits will continue to April 2021 instead of ending in December. The current CDC eviction moratorium will be extended until January 31, 2021.

For Businesses: Business expenses paid for with PPP proceeds are tax-deductible and the funds are not income. This will be the same rule for the second round of PPP funds.

There will be a second round of PPP funding (PPP2) to both first-time borrowers and those who have received a previous loan.

Previous PPP recipients may apply if:

  • You have 300 or fewer employees
  • Have used or will use the full amount of their first PPP loan
  • Can show a 25% gross revenue decline in 2020 quarter compared to the same quarter in 2019

PPP2 first time borrowers include:

  • Businesses with 500 or less employees
  • Sole proprietors, independent contractors, and eligible self-employed individuals
  • Not for profits, including churches

Borrowers that returned all or part of a previous PPP loan can reapply for the maximum amount available to them.  As with the first round of PPP, you will apply through your bank for funds.

More details will follow as they’re available. If you have any questions, contact us at David Mills, CPA, LLC.