Help is on The Way - Emergency Coronavirus Relief Agreement Reached

After months of political bickering, Congress has reached an agreement on an emergency coronavirus relief bill. Although not all the details are fully available yet, the following provides a good overview of the provisions affecting individual taxpayers and small businesses.

Emergency coronavirus relief provisions

Stimulus Payments

Eligible adults will receive a $600 stimulus payment. This stimulus payment is less than the prior $1,200 per adult authorized by the CARES Act in March. However, this time it also includes $600 per dependent child. Also “mixed-status” households are now eligible to receive a payment. A mixed status household, for example, is one where one of the spouses is a noncitizen.

Maximum Payment Amounts for emergency coronavirus relief:

Each eligible adult: $600
Married couple (both eligible) filing jointly: $1,200
Each dependent child under age 17: $600

Payment Phase-out

When a taxpayer’s AGI exceeds the threshold shown below, the payment will be phased out.

Filing Status	Threshold
Unmarried Taxpayers (as well as Married Filing Separately)	$75,000
Head of Household	$112,500
Married Taxpayers Filing Joint	$150,000

Credit Phase-out Thresholds

Given these points, payments could start as early as January, as the need is urgent and there is precedence.

Additional emergency coronavirus relief for unemployed and renters

Unemployment Assistance

Unemployment insurance benefits will be extended through March 14, 2021. However, the supplemental amount will only be $300 per week instead of the $600 that the CARES Act authorized.

Rental Assistance

A $25 billion emergency federal rental assistance program has been approved. While the rental assistance program is to be distributed by state and local governments, the funds will be targeted to families impacted by COVID. In this case, this includes families struggling to make the rent or who may have past due rent compounding on itself. These families will be able to utilize this assistance for past due rent, future rent payments, as well as to pay utility and energy bills and prevent shutoffs. In addition, each state will need to establish their own system for distributing the funds. Also, Native American housing entities will receive $800 million of this rental assistance.

CDC Eviction Moratorium

The legislation also includes an extension of the existing CDC eviction moratorium through January 31, 2021.

Business emergency coronavirus relief and support

Paycheck Protection Program (PPP) Loans & Small Business Support

The legislation includes $284 billion for first and second forgivable PPP loans. Funds will be given to businesses that incurred a loss of revenue.

However, eligibility will be limited to qualifying businesses including:

Businesses with 300 or fewer employees that have sustained a 25% revenue loss in any quarter of 2020 as compared with the same period in 2019.
Small 501(c)(6) organizations that are not lobbying organizations and that have 150 employees or fewer, such as local chambers of commerce, economic development organizations, and tourism offices.

Forgivable Expenses

Forgivable expenses will increase, including:

supplier costs,
investments in facility modifications, and
personal protective equipment needed to operate safely.

So business expenses that are paid for with the proceeds of forgiven PPP loans will now be tax deductible. Furthermore, this means the loan forgiveness process is simplified for borrowers with PPP loans of $150,000 or less.

Set-Asides

To ensure that smaller borrowers and underserved communities receive the help they need, over $41 billion dollars has been set aside. These “set asides” are specifically for businesses that have:

small businesses with 10 or fewer employees,
small community lenders,
independent live venue operators, including eligible independent movie theaters and museums, affected by COVID-19 stay-at-home orders.

Emergency coronavirus relief for working parents

Earned Income Tax Credit & Child Tax Credit

The earned income tax credit and child tax credit are based upon income and earned income (meaning, income from working). Therefore, a family’s 2019 income can be used to calculate the credits for 2020. This is because families may have had reduced income during 2020 that would adversely affect the amount of these credits.

Additional emergency coronavirus relief issues that don’t impact tax returns

School Funding

The IRS has put aside $82 billion of funding for states, K-12 schools, and institutions of higher education that have been significantly impacted by the coronavirus pandemic. Furthermore, this school funding is similar to the CARES Act emergency education relief funds.

Child Care

$10 billion in emergency coronavirus funds have been set aside for child care. While these funds can be used to provide child care assistance to families, they maintain the flexibility given to states through the CARES Act. Also, child care providers can use these funds to cover their increased operating costs during the pandemic. While emergency relief will help stabilize the child care market, it will also allow states to expand child care assistance to essential workers and working families. The bill also includes $250 million for Head Start providers to ensure they are able to continue to safely serve low-income children and families throughout the pandemic. Individual states administer this child care program.

Transportation

The transportation provision provides funding for transit agencies, airlines and airline contractors, airports. In addition, this will also provide funding for state DOTs, the motorcoach industry, and Amtrak in order to keep the U.S. transportation system functioning. Specifically, the transportation aid will assist in: