Coronavirus Response and Relief Supplemental Appropriations Act, January 2021
The following information summarizes some of the major provisions of The Coronavirus Response and Relief Supplemental Appropriations Act (the Act) that was signed into law on December 27, 2020.
Now is the time to assess how you and your business will be impacted. We will keep you updated and provide more detail analysis of the provisions in the coming weeks.
- Another round of nontaxable recovery rebate payments of up to $600 for individuals and $1,200 for a married couple filing jointly, plus $600 for each dependent child under the age of 17. The amount of the payment is based on 2019 filings.
- Adult dependents will not receive checks.
- These payments begin phasing out for single taxpayers whose adjusted gross income exceeds $75,000 ($150,000 for a married couple).
- A refundable tax credit may be available to taxpayers who earned less in 2020 than they did in 2019.
- Unemployed individuals will receive an additional $300 per week through March 14, 2021.
- Pandemic Unemployment Assistance (PUA) that expands unemployment benefits to self-employed and gig workers was extended to a maximum of 50 weeks.
- Unemployment compensation is taxable income to the recipient.
Other Tax Credits and Deductions
- Extension and expansion of Employee Retention Tax Credit (ERC)
- Allowable if you have a PPP loan but cannot utilize the same wages as used for forgiveness.
- Extended to 6-20-2021 with some changes post 2020.
- The credit percentage increased to 70% (up from 50%) of qualified wages.
- Qualified wages increased to $10,000 per quarter per employee.
- Qualified wage restrictions now apply at 500 (up from 100) employees.
- The gross receipts requirement decreased to 20% from 2021 to 2020 (previously was 50% between 2020 and 2019)
- Paid sick and family leave credits under the Families First Coronavirus Response Act (FFCRA) were extended to March 31, 2021.
- Business meals provided by a restaurant are 100% deductible for 2021 and 2022.
- Taxpayers taking the Earned Income Tax Credit or the Child Tax Credit may use income from their 2019 tax year to determine their 2020 credit.
The following credits and provisions have been extended:
- IRS Section 179D, the Energy-Efficient Building Deduction, was permanently extended.
- IRS Section 45L, the Energy-Efficient Home Tax Credit was extended through the 2021 tax year.
- Treatment of mortgage insurance premiums as qualified residence interest, was extended through the 2021 tax year.
- Personal residence debt forgiveness as nontaxable income was extended through the 2021 tax year.
- The above-the line extension for cash charitable donations made by nonitemizers was extended through the 2021 tax year. For 2021, the maximum amount of the deduction was increased to $600 for joint filers ($300 for single filers and married couples filing separate returns).
- The 100% adjusted gross income limitation for cash contributions to public charities was extended through the 2021 tax year.
- The 7.5% AGI threshold for unreimbursed medical expenses as an itemized deduction was made permanent.
- Provision allowing employers to pay student loans for employees up to $5,250 (nontaxable to employees) has been extended through the 2025 tax year.
- The $250 above the line deduction for unreimbursed teacher expenses now includes PPE expenses.
- Unused benefits in FSA and dependent care accounts can be rolled over from 2020 to 2021 and 2021 to 2022.
- IRC Section 181, allowing the immediate expensing of certain qualified film, television and live theatrical productions, was extended until December 31, 2025.
What the New Law Does Not Contain
- Aid for state and local governments
- Liability protections for businesses
- Hazard pay for essential workers
Please call one of our team members on 973.298.8500 if you have additional questions.