This week’s episode details some major updates to President Biden’s Stimulus Bill as well as a change to the Paycheck Protection Program that allows for increased loan amounts for Schedule businesses (sole proprietors, independent contractors, freelancers, etc.)
And we're back again for another episode of Texas made simple to talk about the latest developments of president Biden's $1.9 trillion stimulus bill nicknamed the American rescue plan, as well as a massive change to triple P loans for schedule C businesses. This is not a repeat of last week's episode, but rather an important update.
The biggest thing that has changed with the stimulus bill since last week is that stimulus checks have been significantly narrowed in scope. The income limits were originally supposed to be the same as the last two checks, which allowed singles. Who've made below 75 K to get the full check and get a partial check for income between 75 K and 100 K under the latest revision.
However, Singles will only be able to get a partial check for income between 75 K to 80 K state of differently. Those making between 80 K to a hundred K will not get a check under the new rules. Those making between 75 K to 80 K we'll get a much smaller check than they would have otherwise under the old income limits.
However, their check may still be larger than the last stimulus checks. Since this one will be up to $1,400 per person, as opposed to the last stimulus check amount of $600 per person. Also, it will include all dependents regardless of age, without a cap. For married taxpayers, you can multiply the income limits by two.
So you'll still qualify for the entire check. If your income is below 150 K a partial check between 150 K to 160 K and no check. If your income is above 160 K. And as a reminder, when I say income, I'm referring to adjusted gross income, also known as AGI. The other major change is that the proposed increase in the federal minimum wage from $7 and 25 cents an hour to $15 an hour, that was supposed to be phased in over the next four years has been eliminated.
If you've been following the legislation, then you know that both of these changes happened in the Senate. Since the house bill had both provisions in it. As a result, it's going to have to go back to the house. After it's passed in the Senate, before it can go to president Biden for signature. At this point, it's mostly a race to the finish line to get it done.
So expect this bill to be signed into law early next week. And when it comes to your 2020 tax returns, you need to be especially careful as to whether you should file now or wait, given the new income limitations. If you're single and your 2019 AGI was below 75 K in 2020 will even be a dollar above 75 K wait to file your return until after you get your stimulus check running a foul.
This could cost you thousands of dollars. If your 2019 income was even a dollar above 75 K and your 2020 return is less than 75 K by all that return, as soon as you possibly can. If you're married, multiply those numbers by two and use the exact same logic. And if
you're unsure about how best to strategize your filings, give your local Darcor CPA, a call or email, and they'll be more than happy to help you out.
Switching gears, the SBA released a new interim final ruling, which honestly is a contradiction in terms that allows for schedule C businesses. So you're sole proprietors, freelancers, independent contractors, et cetera, to use gross revenue instead of net profit to calculate their triple P loan amount.
Further, this can be applied to both first draw and second draw triple P loans, but it cannot be applied retroactively. If you've already received a triple P loan under the old rules. So if you didn't take a triple P loan, take a look at your 2019 or 2020. Schedule C line seven and divide that by 12 and then multiply that number by 2.5.
The result will be the triple P loan that you qualify for under the new rules. However, keep in mind that to get a second draw triple P loan, you'll still need to be able to demonstrate a 25% decline in those same revenues reported on line seven of your schedule C in 2020 compared to 2019. Unless you can show a 25% decline in any given quarter of 2020 compared to the same quarter in 2019.
If that sounds like a lot. You're right. It is, but that's why you have a dark horse CPA anyway, that's it for now? Thanks for tuning in to TMS or taxes made simple. If you're not into the whole brevity thing, because there's TMI and then there's TMS. See you next week.