Consolidated Appropriations Act, 2021
AKA COVID-19 Relief PackageDecember 23, 2020
Congress passed the 5000+ page Consolidated Appropriations Act, 2021 on Monday, December 21, 2020. Here are some highlights of that bill. Please note this has not yet been signed by President Trump and could be subject to change.
Additional 2020 Recovery Rebates –
Additional 2020 stimulus payments of $600 per taxpayer and qualifying children. The payment phases out starting at $150k for married-joint; $75k for single taxpayers and $112,500 for head of households. Advanced payments will be based on the 2019 tax return filed. If no advanced payment is received, a reconciliation is made with the 2020 individual tax return.
Educator Expenses –
The $250 above-the-line deduction will now include PPE, disinfectant and other supplies used to prevent the spread of COVID-19.
Charitable Contributions –
The above-the-line deduction for non-itemizers has increased to $300 for single taxpayers and $600 for married filing joint through 2021. Non-cash contributions are not eligible.
Health and Dependent Care FSA –
Employers are temporarily allowed to extend the grace period for 2020 and 2021 to 12 months after the end of those years for unused benefits and contributions.
Medical Expense Threshold –
The 7.5% income threshold becomes permanent.
PPP Loan Expenses –
Deductions will be allowed for expenses paid with proceeds from a forgiven PPP loan.
EIDL Advance is Replenished –
Receipt of the EIDL Advance will have no impact on PPP loan forgiveness, no reduction is necessary.
Simplified Application for PPP Loan Forgiveness –
One-page application for loans $150k and less. Less documentation will be required for loans of $150,001 to $1,999,999.
PPP Second Draw Loans for Eligible Recipients –
Businesses that employ 300 or less employees. Proceeds capped at $2 million. Gross receipt restrictions apply. The full amount of first PPP loan must be used.
Business Meal Deduction –
Beginning in 2021 and 2022 these expenses will be 100% deductible.