Congress has officially passed the new $900 billion pandemic relief bill that will affect almost every American in one way or another. This is the second largest aid package ever provided, only behind the $2 trillion CARES Act approved in March of this year. We are happy to provide a brief oversight (the text of the actual bill is 5593 pages long) of key provisions within the bill.
The new aid package will send direct payments of $600 to individuals, including children. This means a family of four could receive up to a $2,400 benefit (depending on income limits). Payments will begin phasing out for individuals with adjusted gross incomes of more than $75,000. If an individual made more than $99,000, they would receive no direct payment. Keep in mind, income limits are based on 2019 tax returns. For those who filed their 2019 return, they will receive their money automatically and if your bank account information was on your tax return will have the funds directly deposited into your bank account. For couples, the income limits double, meaning a couple making up to $150,000 would receive the full direct payment, which would phase out up to $198,000 income. ‘Children’ eligible for direct payments includes each dependent under 18 years of age living in the same household.
Enhanced unemployment benefits of $300 per week will be extended 11 more weeks from December 26th, 2020 to March 14th, 2021. This includes the bonus payment of $300 for ‘gig’ workers, which includes freelancers, independent contractors, self-employed and certain people affected by the coronavirus. Keep in mind, while this extends the programs to March 14, it could continue through April 5th for existing claimants who have not yet hit the 50-week maximum.
Eviction Ban & Rental Assistance
The federal eviction ban established by the CARES Act was set to expire (after a prior extension) at the end of the year. The new bill extends that moratorium one month to January 31, 2021. In addition, the bill provides $25 billion to state and local governments to help qualified renters for rent and utilities. Keep in mind, qualified renters are prioritized to renter households whose incomes do not exceed 50% of local area median income, or renters who are currently unemployed and have been for more than 90 days.
Prior to the bill, any expenses paid for by forgiven PPP loans were considered non-deductible by the IRS. This bill allows companies to deduct those expenses on their tax returns even if the PPP loan has been or will be forgiven.
Payroll Protection Program “Second Draw”
Businesses that experienced at least a 25% reduction in gross revenue in one quarter in 2020 relative to the same quarter in 2019 become eligible for another round of the Payroll Protection Program. This was intended to provide additional assistance to those businesses hardest hit by the pandemic. Keep in mind, the second round will still be targeted to small businesses for loans up to $2,000,000 that also will be eligible for forgiveness. Restaurants have been set in a separate category that allow them to receive loans equal to 3.5x their average payroll costs. Other businesses will be restricted to 2.5x average payroll.
Speaking of forgiveness, the new PPP would expand the list of expenses which qualified for forgiveness (previously payroll, rent, and utilities). Now included expenses will be expanded to buy supplies from vendors, purchasing protective equipment for staff, and to fix property damage due to public disturbances.
While the above items are major factors associated with the bill there are some additional items to discuss. Grants will be provided up to $10 million per eligible business for theaters and other live venues. Much like the PPP, these grants can be used for payroll, rent, utilities, and PPE. $82 billion in aid will be provided to K-12 schools and colleges as well as an additional $10 billion to support childcare providers.
And finally, this bill will provide $20 billion to purchase the COVID vaccine so that it can be provided at no charge for those who need it.
There are additional items in the bill well beyond our ‘additional items’ section, but that’s why the actual text of the bill is well over 5,000 pages.
As always, if you have any questions related to the new pandemic stimulus or how this bill could affect you, your Innova advisor is here for you. We have added a new scheduling feature on our website. This allows you to view your advisor’s schedule and find 15, 30, or 60 minutes that work well for both of you. You can access that new feature HERE.
Innova Wealth Partners, LLC (“Innova”) is a registered investment advisor. Information presented herein is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed.
Readers of the information contained on these performance reports, should be aware that any action taken by the viewer/reader based on this information is taken at their own risk. This information does not address individual situations and should not be construed or viewed as any typed of individual or group recommendation. Be sure to first consult with a qualified financial adviser, tax professional, and/or legal counsel before implementing any securities, investments, or investment strategies discussed.
The tax information and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Innova does not provide legal or tax advice. Innova cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Innova makes no warranties with regard to such information or results obtained by its use. Innova disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.