Now that the Senate has passed the second stimulus package. As a small business owner in New York City and elsewhere you may be asking what you need to know to benefit from the second stimulus package.

Our small business clients in New York and elsewhere have been asking us the following questions:

  • Do I have to pay tax on my PPP Loans that are forgiven?
  • Will there be a second round of PPP Loans?
  • Will I have to fill out lots of paperwork to achieve Loan forgiveness on my PPP Loan?
  • Will I be eligible for a second round of stimulus checks?

This article will cover the key takeaways of how the stimulus package can potentially benefit you and your small business.

1. PPP LOANS WHICH ARE FORGIVEN WILL BE TAX FREE

  • If your PPP Loan is forgiven you will not pay an taxes on any amounts of your PPP Loan that is forgiven.
  • For most business owners this means tax savings of $10,000 to $50,000 or more.
  • The IRS originally stated that all PPP Loans that are forgiven would have to be included in income. This has been changed by the new law which allows for a recipient’s PPP Loan Forgiveness to be tax free.

2. ELIGIBLE ENTITIES HAVE A SECOND CHANCE TO RECEIVE A PPP LOAN

PPP recipients may apply for a second round PPP loan provided they meet the following conditions:

  • Show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
  • Have used or will use the full amount of their first PPP loan
  • PPP loans must be necessary for a business to support its on-going operations.
  • The borrower must employ no more than 300 employees, or meet an alternative size standard.

3. SIMPLIFIED APPLICATION FOR LOANS UNDER $150,000

  • Borrowers who received a first round PPP Loan of less than $150,000 are eligible for forgiveness by submitting a one-page application.

4. EXTRA UNEMPLOYMENT BENEFITS

  • Claimants receiving unemployment benefits are eligible to receive an extra $300 per week from December 26th until March 14, 2021.
  • Self-employed individuals and business owners are eligible for Unemployment benefits if they qualify.

5. ADDITIONAL STIMULUS CHECKS & ELIGIBILITY

  • The second stimulus check amount is $600. That is half of the first round payments. A family of three could get a second stimulus check of $1,800.
  • If your filing status is single your first stimulus payment will be eliminated if your 2019 Adjusted Gross Income is greater than $99,000 and reduced if your 2019 adjusted gross income (AGI) was between $75,000 and $99,000.
  • If your filing status is married your first stimulus payment will be eliminated if your 2019 Adjusted Gross Income is greater than $198,000 and reduced if your 2019 adjusted gross income (AGI) was between $150,000 and $198,000.

This explains the main takeaways of the stimulus package that benefit small New York City and other businesses. Please stay tuned for more updates.

SPEAR CPA CFP BUSINESS TAX AND ACCOUNTING SERVICES IN NEW YORK CITY

To learn how New York City and State business owners save $10K, $20K, 50K in taxes every year, please check out our Video that goes through how you can do this in more detail.