After months of disagreements and delays, Congress passed and President Trump signed a second coronavirus relief stimulus package. The law provides $900 billion in assistance to individuals and businesses, including another round of stimulus checks, extended unemployment benefits, and more Paycheck Protection Program (PPP2) funding. The stimulus package also simplifies the PPP forgiveness process for smaller loans.

Here are key points from the law and the ways they might affect you and your business. As with other pandemic-related legislation, this information is subject to change and to additional interpretation. We will keep you updated, and we are always available to answer any questions or provide advice as needed. 

More checks, extended unemployment

The two main benefits for individuals are:

  • Second round of stimulus checks. Individuals who earned $75,000 or less in 2019 (adjusted gross income), as well as couples who earned up to $150,000, will receive a second stimulus payment of $600 each, as well as $600 for each of their dependent children under 18. The amounts are reduced for those earning more than $75,000, and payments are completely phased out at $99,000 (joint income of $198,000). Note that, as of December 28, Congress is voting on a separate bill to increase individual payments from $600 to $2,000.
  • Extra unemployment benefits. The new package provides for up to 11 weeks of extended unemployment benefits as well as up to $300 in enhanced payments per week. Self-employed individuals and contractors are eligible.

The new stimulus package also provides aid to renters who have fallen behind on payments, and extends the eviction moratorium through January 31.  

Paycheck Protection Program round 2 (PPP2) and tax deductibility

For businesses, the new stimulus package makes more money available through PPP loans and changes the way expenses covered by PPP proceeds are treated on tax returns. Here are some key points: 

  • More PPP funds. PPP2 provides $284 billion for additional loans to small businesses. PPP2 caps loans at $2 million, requires a business to have 300 or fewer employees, and requires the business to have suffered a revenue loss of 25% or greater in any quarter of 2020 compared to the same quarter in 2019. Sole proprietors, independent contractors, and certain self-employed individuals and non-profits are also eligible for PPP2.
  • Simplified forgiveness application. The new law creates a simplified forgiveness request process for loans of $150,000 or less. The new forgiveness application will be reduced to one page that includes a description of the number of employees the business was able to retain with the loan, the estimated amount of loan spent on payroll, and the amount of loan, as well as an attestation that information is correct.
  • Business expenses paid for with PPP funds are tax deductible. This is a total about-face from the original treatment of these expenses. In the new law, business expenses paid with PPP loans are tax deductible.

We can help

If you need assistance applying for a PPP2 loan or negotiating the forgiveness process, we can help you calculate payroll and non-payroll expenses and review your forgiveness documentation. We can also help determine the tax deductibility of expenses and answer other questions related to the new stimulus package. Please give us a call.