How Will New COVID-19 Legislation Affect Your Taxes?

Posted on January 18, 2021January 5, 2022

The Consolidated Appropriations Act, signed into law on Dec. 27, provides relief in response to the COVID-19 pandemic, including another round of “recovery rebate” payments to individuals and an expansion of the Paycheck Protection Program (PPP) loan program for businesses and other employers. The legislation also includes some tax relief for businesses and individuals.

AAFCPAs has provided a brief overview, for your convenience, of some of the tax-related provisions that may affect you or your business:

Individuals

Permanent reduction of adjusted gross income (AGI) floor to 7.5% for medical expense deductions
Extended nonitemizer deduction for up to $300 of cash donations ($600 for married couples filing jointly) to qualified charities through 2021
Extended 100% of AGI deduction limit for cash donations to qualified charities through 2021
Extended exclusion for certain employer payments of student loans through 2025

Businesses and Other Employers

Clarification of tax treatment for PPP loans, certain loan forgiveness and other financial assistance under COVID-19 legislation
Extended payroll tax credits for paid leave required under the Families First Coronavirus Response Act through March 2021
Extended and expanded tax credits for retaining employees under the Coronavirus Aid, Relief and Economic Security (CARES) Act through June 2021
100% business meals deduction for food and beverages provided by restaurants in 2021 and 2022
Extended Work Opportunity credit through 2025
Extended New Markets credit through 2025
Extended family medical leave credit through 2025

This is a brief look at some of the most significant tax-related provisions in this 5,500+ page legislation. If you have questions please contact David McManus, CPA, CGMA at 774.512.4014, dmcmanus@nullaafcpa.com; or your AAFCPAs Tax Partner.

About the Author

David McManus, CPA, CGMA

Dave leads AAFCPAs’ Cannabis Business Practice, providing highly coveted tax, entity structure, and business advisory solutions. Dave has been deeply immersed in understanding the complex financial and operational nuances of the cannabis industry since 2012. He advises multi-state operators, recreational and medical retailers, cultivators, product manufacturers, and investors. He proactively advises clients on risks, opportunities, and tax implications related to market entry, accounting methods, capital structure, debt financing, R&D, M&A, and goodwill impairment. He has led industry training sessions on interpreting and implementing new federal and state marijuana statutes, including compliance with 280E. Dave maintains a strong network of cannabis industry investors, attorneys, bankers, employee compensation and benefits providers, realtors, risk managers, and insurance agents, and he leverages these resources as appropriate to help clients achieve success.