By Raffi Yousefian | Published 03/10/2021; Updated 03/10/2021 3:54:17 PM
This one is BIG, $1.9 trillion big.
Let’s see what they’ve cooked up this time and how it helps your small business or nonprofit. We’re not going to get into the stimulus payments, the extension of unemployment benefits, additional funding for state governments, or other programs. Instead, we’ll highlight the initiatives that have a direct impact on your organization. Let’s take a look.
Extension of the Employee Retention Credit (ERC)
The ERC 2 will be extended through December 31, 2021. This was initially set to expire on July 31, 2021. The ERC gives employers a credit of up to $7k per employee per quarter for each quarter they experience a 20% decrease in gross receipts or are fully or partially shut down due to a government order. You can read more about this here.
Extension of Paid Sick Leave and Family Leave Credits
The Families First Coronavirus Response Act (FFCRA) was signed into law in March 2020 as part of the phase 2 relief, aka Stimulus 2.0. This legislation requires that small business employers provide sick leave (2 weeks) and family leave (10 weeks) for eligible employees, which the government would refund up to a certain amount. The total credit for sick leave and family leave is about $2k and $10k respectively per employee. The latter has been increased to $12k through this new round of stimulus and the program has been extended through September 30, 2021. We wrote an article on the FFCRA program here. Some other changes to this program include:
- paid leave credits will be allowed for leave that is due to a COVID-19 vaccination
- the limit for overall paid sick leave days will reset after March 31, 2021
- 501(c)(1) organizations can now claim the credits too
PPP & EIDL
The government will allocate an additional $15 billion towards the Economic Injury Disaster Loan (EIDL) program and $7.25 for the Paycheck Protection Program (PPP).
Restaurant Revitalization Fund (RRF)
The fund establishes a $28 billion fund that will provide grants to restaurants and similar establishments to replace the revenue they would have earned if COVID didn’t happen. Restaurants have been asking for specific aid for their industry, and they finally got it. More info on this here.
- EIDL grants will be nontaxable and the expenses paid with those funds will be deductible
- RRF grants will be nontaxable and the expenses paid with those funds will be deductible
- The CARES act removed the $250/500k cap on an individual’s business loss deduction against other sources of income and allowed the losses to be carried back 5 years or carried forward through December 31, 2025. This applies to losses generated between 2018-2020. The losses can now be carried forward through December 31, 2026, as a result of the new stimulus.
Feel free to contact us if you need help navigating any of these programs.
Raffi Yousefian is a licensed CPA who advises restaurants, nonprofits, and professional services companies on accounting and tax issues in his role as Managing Principal at RY CPAs.