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Federal stimulus includes business tax breaks

Federal stimulus includes business tax breaks

Many of us have received our personal stimulus checks from the $1.9 trillion American Rescue Plan Act.
In addition, the ARPA includes several tax breaks and financial benefits for businesses.

Here are some of the tax highlights of the ARPA offered by chamber member Bland Garvey Accountants and Consultants:

The Employee Retention Credit (ERC). This valuable tax credit is extended from June 30 until Dec. 31, 2021. The ARPA continues the ERC rate of credit at 70% for this extended period of time. It also continues to allow for up to $10,000 in qualified wages for any calendar quarter. Taking into account the Consolidated Appropriations Act extension and the ARPA extension, this means an employer can potentially have up to $40,000 in qualified wages per employee through 2021.

Employer-provided dependent care assistance. In general, an eligible employee’s gross income doesn’t include amounts paid or incurred by an employer for dependent care assistance provided to the employee under a qualified dependent care assistance program (DCAP).

Previously, the amount that could be excluded from an employee’s gross income under a DCAP during a tax year wasn’t more than $5,000 ($2,500 for married individuals filing separately), subject to certain limitations. However, any contribution made by an employer to a DCAP can’t exceed the employee’s earned income or, if married, the lesser of employee’s or spouse’s earned income.

Under the ARPA, for 2021 only, the exclusion for employer-provided dependent care assistance is increased from $5,000 to $10,500 (from $2,500 to $5,250 for married individuals filing separately). This provision is effective for tax years beginning after Dec. 31, 2020.

Paid sick and family leave credits. Changes under the ARPA apply to amounts paid with respect to calendar quarters beginning after March 31, 2021. Among other changes, the law extends the paid sick time and paid family leave credits under the Families First Coronavirus Response Act from March 31, 2021, through Sept. 30, 2021. It also provides that paid sick and paid family leave credits may each be increased by the employer’s share of Social Security tax (6.2%) and employer’s share of Medicare tax (1.45%) on qualified leave wages.

Grants to restaurants. Under the ARPA, eligible restaurants, food trucks, and similar businesses that provide food and drinks may receive restaurant revitalization grants from the Small Business Administration. For tax purposes, amounts received as restaurant revitalization grants aren’t included in the gross income of the person who receives the money.

Much more
These are only some of the provisions in the ARPA. There are many others that may be beneficial to your business.

Paycheck Protection Program (PPP) loan application deadline is March 31, 2021: The deadline was NOT extended.

COVID-19 Economic Injury Disaster Loan (EIDL): Taxpayers won't start making payments on these loans until 2022. Click here to read more.

Employee Retention Credit extended the credit deadline from June 30 until Dec. 31, 2021 and expanded eligibility to new startups after Feb. 15, 2020.

Family and sick leave credits extended to Sept. 3, 2021 with increased limits for paid family leave to $12,000 and the limitation on overall number of days taken will reset after March 31, 2021.

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