1. Additional Direct Payments to Households – The Department of Treasury will send a $600 stimulus check for each eligible adult and qualifying children in a household based on adjusted gross income up to $75,000 (single return) or $150,000 (joint return). The amount of the stimulus check is reduced by 5% per $1,000 over $75,000 for single filers and reduced by 5% per $1,000 over $150,000 for joint filers. If adjusted gross income reaches $87,000 for a single filer or $174,000 for joint filers, household eligibility is reduced to $0.
2. Clarification on Income and Tax Year to receive payments – As written, those who WOULD have been eligible for stimulus based on 2020 income, but did not receive it because of a higher 2019 income, will be eligible for a tax credit for that amount when they file 2020 taxes. On the other hand, those who had 2019 income that was low enough to qualify for the stimulus, but 2020 income was higher than the threshold, will not have to pay back any stimulus paid out.
3. Extension of Unemployment Benefits – Federal subsidies on unemployment benefits will be extended to the middle of March, 2021. Additionally, unemployment will be increased by $300 per week for this period of time.
4. FSA eligible for rollover – Flexible Savings Accounts for both medical and dependent care are “use it or lose it” – meaning, if the funds are not used by the end of a given year, those funds are gone. This bill changes the rule so that funds from 2020 can be rolled to 2021, and 2021 funds can be rolled into 2022.
5. Deductibility of Medical Expenses – Typically, medical expenses are deductible from income only if they exceed 10% of AGI (adjusted gross income). However, this new law reduces the amount to 7.5% for medical expenses to be deductible. This was already established by the CARES Act for 2020 but has now been extended for 2021.
6. New Round of Paycheck Protection Program – New funds are available for businesses to borrow under this forgivable loan program. While the eligibility of expenses that qualify for forgiveness has been expanded, rules are more stringent to qualify for the loan; most notably, a business must show at least a 25% drop in revenue for one quarter in 2020 from the corresponding quarter in 2019.
7. Further Clarity on Tax Deduction of PPP loan expenses – Previously, the IRS had indicated that it would not allow expenses to be deducted for which PPP money had been used (i.e. payroll, rent, etc.), which would have effectively made PPP funds taxable. However, the new law clarifies that these expenses will still be tax-deductible.
8. Business Meal Deduction – The 2018 Tax Cuts and Jobs Act made it so that only 50% of the cost of business meals were tax deductible. The new bill makes it so that 100% of business meal costs are deductible for both 2021 and 2022, in an effort to boost the crippled restaurant industry.
9. Employee Payroll Tax Deferral – Small businesses can defer payroll tax even further, until December 31, 2021
10. Employee Retention Tax Credit – This changes the credit, which was part of the CARES Act, so businesses that use PPP funds can ALSO qualify for this credit, provided they meet other criteria, such as a 20% or greater drop in revenue in 2020.
In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.
Add me to the weekly newsletter to say informed of current events that could impact my investment portfolio.
Securities and advisory services offered through EWA LLC dba Equilibrium Wealth Advisors (a SEC Registered Investment Advisor).
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.