Updates Regarding the $10,200 Unemployment Income Exemption for 2020

By Gregory Bilecki, Senior Accountant

On Wednesday, March 24th, the IRS released guidance centered around the $10,200 unemployment income exemption provision per terms of H.R. 1139, more commonly known as the American Rescue Plan Act.

Federal forms were not updated timely to reflect the provision rendering certain taxpayers ineligible who qualified. For those who have yet to file an amended return and are affected, the IRS is currently implementing an automated solution to be rolled out in May with specific dates currently unknown as of the date of this article. Per updated IRS guidance, there is not a need for taxpayers to file an amended return unless amending substantiates an additional purpose beyond the unemployment income exemption. This process is designed for those only who have already filed for 2020 and otherwise meet the exemption requirements to not have unemployment wages included in taxable income.

For those who have still yet to file, federal forms and most tax software have already been updated, while also allowing the full $10,200 exemption regardless of individual or married filing status if you are under the $150,000 AGI threshold (with the exemption calculated as part of the threshold requirements).

For additional details and up-to-date reporting information, make sure to visit IRS.gov.

PPP Program Extended Through May 31st

for-main-street-businesses-ppp-relief-is-now-within-reach

By Gregory Bilecki, Senior Accountant

In yet another landmark decision, on Thursday, March 25th, the Senate passed House bill H.R. 1799, also known as the PPP Extension Act of 2021 extending the federal PPP Program through May 31st. As of the date of this article, around $79B in funds are expected to be available at the current lending rate through mid-April.

For small businesses, including Schedule C filers, this comes as welcoming news as many businesses still have not received PPP funds yet or are still waiting to apply. The previous deadline of the program was set to end on March 31st, 2021. The updated provisions within the Act do not provide any additional funding, however it does extend the date for the SBA to process applications which are filed by May 31st for another 30 days. Per initial guidance provided within the Consolidated Appropriations Act, the PPP program may end before May 31st if all funds have been exhausted, therefore those planning to apply should still do so as soon as possible.