Below is a quick update as we close 2020 and welcome 2021 with OPEN ARMS!
- Covered Expenses paid with your PPP#1 Loan will now be tax deductible for money already received
- PPP#1 funds will not be taxable income, which means the expenses paid with the PPP#1 funds will be tax deductible
- The New Tax Bill, that President Trump signed on Sunday, December 27, 2020, repeals the requirement of deducting the EIDL advance from the PPP forgiveness amount
- The EIDL advance up to $10,000 per Practice (or $1,000 per Employee), will not have to be repaid
- The New Tax Bill simplifies the forgiveness process on PPP loans of $150,000 or less. (We have yet to see what that new process or form will be). Please wait to apply for forgiveness, because the Banks are still waiting on updated guidance from the SBA and the US Treasury. Please remember, you MUST file for forgiveness, 10 Months after your 24-week period is up. If you do not file for forgiveness, your PPP Loan will become a two (2) year Loan payable at 1% interest.
PPP#2 – Second Round of Funding
- The SBA will have 10 days (after the New Tax Bill is enacted) to establish regulations for the next round of PPP#2 funding. Thus, please keep in mind that the highlights below are terms we anticipate being signed into law; however, the SBA’s regulations may alter this.
- $284.5 Billion in funds will be available through the next PPP#2 loans.
- Paycheck Protection Program (PPP#2) offered through March 31, 2021.
- Is your Practice eligible for the second round of funding PPP#2? Businesses with less than 300 employees who have had a 25% or greater reduction in collections (i.e., gross receipts) in any ONE quarter of 2020, when compared to that same quarter of 2019 are eligible. I suspect that most practices will qualify, since you were closed a good portion of Q2 2020. If so, we will then need further guidance from both the SBA and the US Treasury, as to what loan amounts will be available.
Other Key Tax Provisions
- Employee Retention Tax Credit: Extended through July 1, 2021; We are waiting on further guidance as to how this work in 2021.
- COVID-Related Pay Tax Credits: Extended to March 31, 2021. These are the refundable payroll tax credits for Emergency Paid Leave and Emergency Family Medical Leave Pay that were set to expire on December 31.
- Charitable Giving Incentive Extended: One-year extension of the $300 above the line deduction, meaning you can take this deduction even if you do not itemize your deductions on your individual income tax return. Is now $600 if Married Filing Joint (MFJ).
Department of Health & Human Services (HHS)
Most of you received Phase 2 funding from the Department of Health & Human Services. Some of you have already received funding from the HHS Phase 3 funding. You will have to report to the Department of HHS in January 2021, and again in July 2021, as to how you used these funds and what they were spent on. In January 2021, the Department of HHS will be supplying us with further guidance as to what documents will be needed in order to repayment of any of those payments. As of now, please save all documentation (Invoices, Canceled Checks and Credit Card Receipts) for any items you purchased that would qualify for PPE Equipment & Supplies. We will be sending out an updated e-mail with instructions, as soon as the requirements for the rest of the documentation is published.
Stay safe and COVID free!
Happy New Year,
The Team at GPA, LLC