Aug 9

Aug 9 Stimulus Round 2 Update: Checks, unemployment, PPP and tax deductions

Updated as of 8/8/2020

Last week there were meetings between the Democrats and the White House to vote on the HEALS Act by Friday – it was unsuccessful.

Nothing has passed but I wanted to put together an updated blog where I can inform you on what they DO agree on and what the hold up is.

This is not a political post or opinion piece, its simply an update. It’s also not a comprehensive update, there are many pieces to the bill and these are highlights.

Okay here we go…

Second Stimulus Check

This is the main area where both the Democrats and Republicans agree. They are in favor of the amount of $1,200 again.

Expansion of the Employee Retention Payroll Credit

Both sides are proposing higher payroll tax credits for business owners to take on their employees, this is favorable for businesses who have employees that didn’t take the PPP loan.

Unemployment Benefits

Both sides are in favor of extending the additional unemployment benefits that ended in July (previously $600 per week), but haven’t been able to agree on an amount or duration.

Democrats want it continue as $600 per week and well into 2021.

Republicans want it to be more like $200 per week and certainly ending by December 31st 2020.

They are surprisingly getting closer and Democrats are willing to lower the amount if they can get better negotiations on other parts of the bill.

Second Round of PPP funds

Both sides want another round of PPP funds and Senator Mark Rubio is working on making forgiveness easier. It’s been noted that the first round was very easy to qualify for and there may be more restrictions in this second round. Such as, proving decline in income, limitations on employee counts, etc.

In addition, extending the deadline to apply to December 31st and eliminating the 60% payroll rules.

Tax Deductions

Both sides are for increased tax deductions but unfortunately, they want different deductions.

Democrats want to deduct state and local income taxes (I assume in addition to standard deduction) which is favorable to high income tax states like OR and CA! Sorry WA this doesn’t really help you much (unless you spend a ton in sales tax on a car or RV).

Republicans wants to be able to deduct 100% meals on business tax returns. This would only impact businesses and in my opinion is sort of silly since expenses for meals would be low in 2020 considering we’ve been quarantined. Although I suppose this would now encourage higher expenses to restaurants?

Lastly,

The difference between what each party wants to spend is about $2 trillion. Yikes. And now, since nothing could be voted on August 7th, they are on a break for 4 weeks.

Until they reach an agreement there will be no stimulus or additional aid.

What did Trump do on 8/8?

Trump has stated he can take this into his own hands…its unclear if he has the authority to do that and this will likely be challenged.

But he did sign 4 executive orders regarding:

Unemployment - $400 per week (replacing $600 previously)
Deferral of Employee portion of social security and medicare - NOTE this is a deferral and not elimination which means a lumpsum will be due at a later date
Extensions on evictions and foreclosures
Extension of student loan payments relief through 12/31/2020

Need a CPA?

I think in a lot of cases it can make sense to do your own taxes – but 2020 is not the year to do it if you are a business. There are so many opportunities and complications coming our way and you should have a CPA to walk you through this. I am taking on some clients right now but have a long waitlist.

I’ll be accepting meetings for the next few weeks so please sign up on the list if you are interested!

And if you are a BIPOC I am prioritizing those business owners first. Click here for the scheduling link.