After some political posturing in December 2020, the $900 billion Consolidated Appropriations Act of 2021 (2021 CAA) was signed into law by President Trump as the COVID-19 pandemic continues to impact employers and employees.
Here are five key highlights:
The new law authorized a second round of $600 checks for people with income that meets the criteria. The Internal Revenue Service website says payments will be automatic for eligible taxpayers who filed a tax return in 2019, those who receive Social Security retirement, survivor, or disability benefits (SSDI), Railroad Retirement benefits as well as Supplemental Security Income (SSI), and Veterans Affairs beneficiaries. The checks start to phase out for individuals who earned at least $75,000 in 2019 and $150,000 for joint filers.
The law provides up to $300 per week in enhanced benefits through March 2021. That amount is a decrease from the $600 weekly payment that the CARES Act provided jobless Americans through July 2020. The benefits extend to self-employed individuals and gig workers.
Student Loan Repayment
The 2021 CAA extends the provision that allows employers to repay up to $5,250 annually toward an employee’s student loan payments through January 1, 2026. The payments are tax-free to the employee.
The 50% limit on the deduction for business meals has been lifted. Business meal expenses after December 31, 2020, and before January 1, 2023, may now be fully deductible.
The new law contains $284 billion in relief for a second round of Payment Protection Program loan funding for the hardest-hit businesses. Businesses with 300 or fewer employees that sustained a 25 percent revenue loss in any quarter of 2020 as compared to the same quarter in 2019 and have used the entire amount of their first PPP loan may be eligible for a second loan. “Second-draw” loans are available through March 31, 2021. Business expenses paid for with PPP loan proceeds are tax-deductible. This reverses the IRS’s previous position that the expenses were not deductible.
As 2021 gets underway, expect some additional guidance from regulators on 2021 CAA.
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About Jim Denton
As managing partner and CEO at Arledge and Associates, Jim Denton directs the firm’s wide range of audit and consulting engagements. Jim joined the firm in 1984 and manages audit, tax and other accounting projects. Jim has also assisted numerous tribal entities through various audits, reviews and consulting projects. Jim is a graduate of the University of Central Oklahoma, receiving his bachelor’s degree in accounting in 1984.