--(BUSINESS WIRE)--Wolters Kluwer Tax & Accounting:
What: After months of negotiations that seemed to continually break down, on December 20, 2020 leaders in the US Congress announced that agreement had finally been reached on another group of provisions to stimulate the economy as the COVID-19 pandemic continues to spread despite the initial, limited availability of vaccines. The legislation was being combined with funding to keep the federal government running for fiscal year 2021 in the very last days of the 116th Congress. The tax provisions include mostly extensions of familiar provisions, with a few surprises added by the legislators.
Why: As COVID-19 cases started to increase in the cooler months, and with many of the stimulus provisions enacted in March either already expired or scheduled to expire at year-end, US Congress felt the need to provide additional stimulus to keep the economy from faltering. Many of the stimulus provisions represent direct aid outside of the tax laws, including extended unemployment benefits, additional funding for the PPP (Paycheck Protection Program) for small businesses, aid for schools, aid for airlines, and funding for vaccine distribution and virus testing. Tax provisions in the legislation include the following:
- Additional 2020 economic stimulus payments for taxpayers of $600, plus $600 for each qualifying child. Eligibility for the payments starts to phase out at incomes of $75,000 for single filers and $150,000 for joint filers
- Allowing the deduction of business expenses paid for with forgiven Paycheck Protection Program loans
- Extension of the special charitable contribution provisions enacted for 2020 through 2021
- Extension, in some cases permanently, of many of the regularly expiring tax breaks that had been scheduled to expire at the end of 2020
- Enhanced Child Tax Credit and Earned Income Tax Credit for low income families
- Restoration of the 100 percent business meals deduction for two years to assist the restaurant industry
- Enactment of disaster relief provisions for 2020 federal disasters
- Allowing COVID-19-related expenses to qualify for the above-the-line educator expense deduction
- Clarification that certain financial aid received by college students and forgiveness of Economic Injury Disaster Loans to small businesses are excluded from income
- Extension of the credit for paid sick and family leave enacted as part of the Families First Coronavirus Response Act through March 31, 2021
- Extension of the employee retention credit through June 30, 2021
- Extension of the time allotted for repayment of employee Social Security taxes deferred under a Presidential Memorandum through the end of 2021
Wolters Kluwer Tax & Accounting has issued a tax briefing on the “Year-End Agreement Reached on Pandemic Relief, Stimulus, and Extenders,” which is available as a complimentary download through the CCH® AnswerConnect online research platform. Note that this briefing may be updated when the legislation is signed into law, so please reach out for the updated link at that time.
Who: Tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting, can help explain the various tax provisions included in the year-end legislation.
PLEASE NOTE: The content of this alert has been prepared by Wolters Kluwer Tax & Accounting for general informational purposes only. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in rendering legal, accounting, or other professional services.
Contact: To arrange an interview with Mark Luscombe or other federal and state tax experts from Wolters Kluwer Tax & Accounting on this or any other tax-related topics, please contact Bart Lipinski.
