Nothing like a few last minute tax changes to make 2020 complete!

Late on 12/27/2020 the President signed the COVID-related tax relief Act of 2020. The tax-related provisions include:

  • Allowing the deduction of expenses paid with forgiven PPP debt;
  • Creating a simplified forgiveness process for PPP loans under $150,000;
  • Repealing the provision that reduced PPP forgiveness by the amount of any EIDL advances;
  • Allowing “second draw” PPP loans for small businesses with significant declines in revenue;
  • Extending and expanding the CARES Act Employee Retention Credit and the FFCRA paid leave credits;
  • Allowing PPP loan recipients to claim the Employee Retention Credit;
  • Allowing 100% deduction for business meals for 2021 and 2022;
  • Providing a second round of Economic Impact Payments ($600 per individual). Payments will be made by 1/15/2021;
  • Extending an additional $300 per week for individuals receiving unemployment benefits through March 14, 2021 (early April 2021 in some instances);
  • Many tax extenders were made permanent including a 7.5% floor for medical expense deductions;
  • Many tax extenders were extended including making PMI deductible, non business energy property credit, and higher credit amounts for solar.

For our California clients, keep in mind that California does not conform to all of these tax provisions. So, adjustments will be required when we calculate your California return.

If you want to read the entire bill, you can locate it here.

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