Month: March 2021 Page 1 of 2

To help taxpayers, the Internal Revenue Service announced that it will take steps to automatically refund money this spring and summer to people who filed their tax returns reporting unemployment compensation before the recent changes made by the American Rescue Plan.

The legislation, signed on March 11, allows taxpayers who earned less than $150,000 in modified adjusted gross income to exclude unemployment compensation up to $20,400 if married filing jointly and $10,200 for all other eligible taxpayers. The legislation excludes only 2020 unemployment benefits from taxes.

Because the change occurred after some people filed their taxes, the IRS will take steps in the spring and summer to make the appropriate change to their return, which may result in a refund.… Read More

The American Rescue Plan Act of 2021 (ARPA) extends and expands the Employee Retention Credit (ERC) through December 31, 2021. The ERC was originally enacted in March of 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The Consolidated Appropriations Act of 2021 (CAA) previously extended and enhanced the ERC, most notably by retroactively allowing employers to claim the ERC even if they took a PPP loan. Under the CARES Act, you could take a PPP loan or claim the ERC, but not both. Eligibility for the ERC is based on a significant decline in gross receipts, or fully or partially suspended operations due to a government order related to COVID-19.… Read More

On Friday, the Internal Revenue Service clarified that personal protective equipment — such as masks, hand sanitizer, and sanitizing wipes — bought for the “primary purpose” of protection against the coronavirus are considered tax-deductible medical expenses.

The agency announced the rules surrounding PPE, saying the amounts paid for it are viewed as medical care under the IRS code. That means purchases of COVID-19 PPE for use by an individual taxpayer, spouse, or dependents that are not covered by insurance can be deducted so long as total medical expenses exceed 7.5% of adjusted gross income.

Purchases of PPE are also eligible to be paid or reimbursed under flexible spending plans and medical savings accounts.… Read More

A bill to move the Paycheck Protection Program (PPP) application deadline from March 31 to May 31 won approval in the U.S. Senate on Thursday.

The final vote to approve the PPP Extension Act of 2021, H.R. 1799, was 92–7.

There was some drama, however. A measure to amend the bill was narrowly defeated 52–48. The amendment, proposed by Sen. Marco Rubio, R-Fla., would have restricted the U.S. Small Business Administration’s (SBA’s) ability to prioritize certain PPP borrowers over others. If the measure had passed, it could have led to an amended bill having to be sent back for approval to the House of Representatives, which had passed the original bill 415–3 but currently is adjourned.… Read More