Individual Tax Filing Deadline Extended to May 17, 2021

On Wednesday, March 17, the U.S. Treasury Department and Internal Revenue Service announced that the federal income filing date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. In addition, any balance due payment for the 2020 tax year is now due on May 17, 2021, instead of April 15, 2021. In line with the federal extension and payment due dates, the Illinois Department of Revenue and Missouri Department of Revenue have also extended individual income tax filing and payment deadlines from April 15, 2021, to May 17, 2021.

First Quarter 2021 Federal and State Estimated Tax Payments

The May 17, 2021 filing and payment of balance due extensions for 2020 individual tax returns do not apply to the first quarter estimated tax payments for tax year 2021. These tax payments remain due on April 15, 2021.

Corporations, Trusts, and Estates

The May 17, 2021 extensions as noted above do not extend the due date of C-Corporations, trust returns, and estate returns and are still due by April 15, 2021.

Hours of Operation

At Scheffel Boyle, our experienced tax professionals have been working extended hours. As such, our offices will continue to operate with our extended hours until April 15. We urge our clients to continue to bring in their tax information to our offices and we will keep you informed.

As always, feel free to contact your preferred office if you have any questions or require additional assistance. We are here to help!

President Biden Signs American Rescue Plan Act

Last Thursday, President Joe Biden signed the American Rescue Plan Act into law. The $1.9 trillion coronavirus relief bill includes several different provisions such as $1,400 stimulus checks for individuals, extended unemployment benefits, and aid for small businesses and not-for-profits. Click here to read the full text of the law.

We encourage you to reach out our professionals for questions about these provisions. We are here to help!

A summary of key provisions from the final bill is as follows:

Individual Provisions

  • Recovery Rebate Credits/Stimulus Checks
    • Taxpayers with adjusted gross income (AGI) under $75,000 will receive $1,400 direct payments. Married taxpayers filing jointly with AGI up to $150,000 will receive $2,800
      • Eligible taxpayers will also receive $1,400 for each dependent
      • Advance payments of the credits will be sent as economic impact payment checks
  • Unemployment Benefits
    • The first $10,200 in unemployment benefits for taxpayers earning less than $150,000 per year is now tax-free effective for the 2020 tax year
    • If you have already filed for 2020, you will need to file an amended return.
    • Extends weekly federal benefit of $300 a week through September 6, 2021
    • Extends pandemic unemployment benefits for gig workers and self-employed individuals
  • Premium Tax Credit (Related to Health Insurance)
    • Expands the Premium Tax Credit for 2021 and 2022 by changing the applicable percentage amounts
    • Taxpayers who have received too much in advance premium tax credits in 2020 will not have to repay the excess amount
    • A special rule is added that treats a taxpayer who has received, or has been approved to receive unemployment compensation for any week beginning during 2021 as an applicable taxpayer
  • Earned Income Tax Credit
    • The credit would be allowed for certain separated spouses
    • Threshold for disqualifying investment income raised from $2,200 to $10,000
    • Taxpayers are allowed to use their 2019 income instead of 2021 income in figuring the credit amount
  • Child Tax Credit
    • Expands the Child Tax Credit by:
      • Making the credit fully refundable for 2021;
      • Making 17-year-olds eligible as qualifying children for 2021 only; and
      • Increases the amount of the credit to $3,000 per child ($3,600 for children under 6)
    • The Child Tax Credit would phase out for taxpayers with income over $150,000 for married taxpayers filing jointly, $112,000 for heads of households, and $75,000 for others
    • Payments of 50% of the credit can be received in advance and will run from July through December 2021. The IRS will create an online portal allowing taxpayers to opt out of advance payments or adding information that could modify the amount received
  • Child & Dependent Care Credit
    • The credit is fully refundable for 2021 only
    • The bill increases the exclusion for employer-provided dependent care assistance to $10,500 for 2021 ($5,250 for married filing separate)
    • The max credit is now worth 50% of eligible expenses up to a limit based on income, making the credit worth up to $4,000 for one qualifying individual or up to $8,000 for two or more.
    • Credit reduction begins at AGI over $125,000. For households over $400,000, the credit can be reduced below 20%.
  • Family & Sick Leave Credits
    • Extends credits established by the Families First Coronavirus Response Act until September 30, 2021
    • The fully refundable credits against payroll taxes compensate employers and self-employed people for coronavirus-related paid sick leave and family and medical leave
    • Increases the limit on the credit for paid family leave to $12,000
    • The number of days a self-employed individual can take into account in calculating the qualified family leave equivalent amount for self-employed individuals increases from 50 to 60
    • Paid leave credits will be allowed for leave that is due to COVID-19 vaccination
    • The limitation of overall days taken into account for paid sick leave will reset after March 31, 2021
    • Credits are expanded, allowing 501(c)(1) governmental organizations to take them
  • Student Loans
    • The act specifies that gross income does not include any amount that would otherwise be included in income due to the discharge of any student loan after Dec. 31, 2020, and before Jan. 1, 2026

Business Provisions

  • Paycheck Protection Program (PPP)
    • Allocates an additional $7.25 billion for PPP forgivable loans; applications scheduled to close on March 31, 2021
  • Restaurant Revitalization Fund (RRF)
    • Allocates $28.6 billion for food and beverage establishments
    • RRF grants equal to the pandemic-related revenue loss of the entity, up to $10 million per entity, or $5 million per physical location (limited to 20 locations)
    • RRF grants are calculated by subtracting 2020 revenue from 2019 revenue and can be used for certain eligible expenses including: payroll costs, mortgage payments, rent, utilities, maintenance expenses; supplies, food and beverage expenses; covered supplier costs; operational expenses; paid sick leave; and any other expense determined to be essential to maintaining the business.
    • Sets aside $5 billion for eligible applicants with 2019 gross receipts of $500,000 or less
    • During the first 21 days of the grant period, the SBA will prioritize applications from restaurants owned and operated or controlled by women, veterans, or socially and economically disadvantaged individuals
    • Funds from RRF grants should not be included in the gross income of the person who receives the grant
  • Economic Injury Disaster Loan (EIDL)
    • Allocates $15 billion to Targeted EIDL grants to businesses located in low-income communities that have no more than 300 employees and have suffered an economic loss more than 30% of gross receipts
    • Funds from Targeted EIDL grants should not be included in the gross income of the person who receives the grant
  • Employee Retention Credits (ERC)
    • Allows eligible employers to claim a credit for paying qualified wages to employees
    • Extends the program through the end of 2021
  • Shuttered Venue Operators (SVO) Grant
    • Allocates $1.25 billion to the SVO grant program

SBA issues interim final rule revisions to PPP

The U.S. Small Business Administration recently laid out its interim final rule revisions to the Paycheck Protection Program. These changes, which are effective immediately, relate to maximum loan amount calculations and program eligibility and apply to PPP loans approved after the effective date of the rule.

The SBA will be accepting PPP loan applications through March 31, 2021.

The key interim final rule revisions to the Paycheck Protection Program are as follows:

  • Individuals who file an IRS Form 1040, Schedule C can calculate their maximum loan amount using gross income instead of net profits
    • At this time, Schedule C borrowers cannot increase the amount of a PPP loan they have already applied for, received, or had forgiven by the SBA
    • With this revised funding formula, First Draw Schedule C borrowers with over $150,000 in gross receipts are subject to review of the good faith loan necessity certification
  • Removes eligibility restriction that prevented business owners who have non-financial fraud felony convictions in the last year from obtaining PPP loans
  • Removes eligibility restriction that prevented businesses with owners who are delinquent or in default of their federal student loans from obtaining PPP loans

In addition to the eligibility and calculations updates, the SBA also provided revisions for six application forms, including:

  • Updated PPP borrower first-draw (Form 2483) and second-draw (Form 2483-SD) application forms
  • PPP first-draw (Form 2483-C) and second-draw (Form 2483-SD-C) borrower application forms for Schedule C filers using gross income
  • A revised lender application form for PPP loan guaranty (Form 2484)
  • A revised PPP second-draw lender application form (2484-SD)

If you have any questions about these changes, the program, or if you have any additional concerns, please contact one of our trusted professionals at Scheffel Boyle. We are here to help!

House passes $1.9 trillion COVID-19 relief package

The U.S. House of Representatives passed the latest COVID-19 relief package early Saturday morning. The bill, titled The American Rescue Plan Act of 2021, H.R. 1319), includes several different provisions such as $1,400 stimulus checks for individuals, extended unemployment benefits, and aid for small businesses and not-for-profits. Click here to view the full text of the bill.

The bill is anticipated to be signed before March 14, when current extended unemployment benefits are set to expire.

At the time this blog was posted, these provisions have not been signed into law. Additional revisions may also be made to the bill by the Senate before their deciding vote. We encourage you to reach out to one of our professionals for questions about these provisions. We are here to help!

A summary of key provisions from the proposed bill is as follows:

Individual Provisions

  • Recovery Rebate Credits/Stimulus Checks
    • Taxpayers with adjusted gross income (AGI) under $75,000 individually will receive $1,400 direct payments. Married taxpayers filing jointly earning up to $150,000 will receive $2,800.
      • Eligible taxpayers will also receive $1,400 for each dependent.
    • Eligibility is calculated using 2019 AGI unless a taxpayer has already filed a 2020 return.
    • Advance payment of the credits will be sent as economic impact payment checks.
  • Unemployment Benefits
    • Extends pandemic unemployment benefits for gig workers and long-term unemployment through August 2021
    • Increases state benefits by $400 per week, up from $300
    • Increases the total number of weeks eligible for the supplement to 73 weeks from 50 weeks
  • Premium Tax Credit (Related to Health Insurance)
    • A special rule is added that treats a taxpayer who has received, or has been approved to receive unemployment compensation for any week beginning during 2021 as an applicable taxpayer
  • Child Tax Credit
    • Expands the Child Tax Credit by:
      • Making the credit fully refundable for 2021;
      • Making 17-year-olds eligible as qualifying children; and
      • Increasing the amount of the credit to $3,000 per child ($3,600 for children under 6).
    • The Child Tax Credit would phase out for taxpayers with income over $150,000 for married taxpayers filing jointly, $112,500 for heads of households, and $75,000 for others
  • Child & Dependent Care Credit
    • Expands the Child & Dependent Care Credit by:
      • Making the credit fully refundable for 2021; and
      • Increases the exclusion for employer-provided dependent care assistance to $10,500 for 2021.
    • Family & Sick Leave Credits
      • Extends credits established by the Families First Coronavirus Response Act until September 30, 2021
      • Increases the limit on the credit for paid family leave to $12,000
      • The number of days a self-employed individual can take into account in calculating the qualified family leave equivalent amount for self-employed individuals increases from 50 to 60
      • Paid leave credits will be allowed for leave that is due to COVID-19 vaccination
      • The limitation on overall number of days taken into account for paid sick leave will reset after March 31, 2021
      • Credits are expanded, allowing 501(c)(1) governmental organizations to take them

Business Provisions

  • Paycheck Protection Program (PPP)
    • Allocates additional $7.25 billion for PPP forgivable loans; applications scheduled to close on March 31, 2021
    • Makes more not-for-profit organizations eligible
    • Some larger not-for-profit organizations are also now eligible to apply for PPP loans
    • Internet-only news and periodic publishers with more than one physical location are now eligible
  • Restaurant Revitalization Fund (RRF)
    • Allocates $25 billion for food and beverage establishments
    • RRF grants equal to the pandemic-related revenue loss of the entity, up to $10 million per entity, or $5 million per physical location (limited to 20 locations)
    • RRF grants are calculated by subtracting 2020 revenue from 2019 revenue and can be used for certain eligible expenses:
    • Sets aside $5 billion for eligible applicants with 2019 gross receipts of $500,000 or less
    • During the first 21 days of the grant period, the SBA will prioritize applications from restaurants owned and operated or controlled by women, veterans, or socially and economically disadvantaged individuals
    • Funds from RRF grants shall not be included in the gross income of the person who receives the grant
  • Economic Injury Disaster Loan (EIDL)
    • Allocates $15 billion to Targeted EIDL grants to businesses located in low-income communities that have no more than 300 employees and have suffered an economic loss more than 30% of gross receipts
    • Funds from Targeted EIDL grants shall not be included in the gross income of the person who receives the grant
  • Employee Retention Credits (ERC)
    • Extends the ERC through the end of 2021
  • Shuttered Venue Operators (SVO) Grant
    • Allocates $1.25 billion to the SVO grant program