Being off, and promising a lighter than normal posting during the holidays was interrupted by the signing of Part II of the Cares Act Sunday, December 27, 2020 …. AKA Appropriations Act of 2021 (all 5593 pages here!)
Given the time of year we will keep this high-level and will expand in great detail shortly, but wanted to give you a couple important bullet points that may be very refreshing, and one call to action should you have not used PPP Part I but want either PPP Part I or II (Your window for both may be closing fast!)
Part II of the Cares Act – AKA Appropriations Act of 2021
PPP Part II has basically the same guidelines for the vast majority of folks in total amount, BUT with a qualifying hurdle to get PPP Part II threshold of having any one quarter of revenues/sales in 2020 being down 25% from 2019.
To clarify, if you as a business owner had only 75% sales revenue in any (just one) quarter versus that same quarter in 2019 you will qualify for PPP Part II.
What follows is most time sensitive, while we do not know anyone in this situation, you guys may and please share if you do.
If you or someone you know did not get PPP Part I but want PPP I OR II, they need to apply for Part I first … and there is a very limited pool of money. It is not possible to get PPP Part II without first getting PPP Part I. With a very limited pool of money for PPP Part I, it is possible that it may run out in short order, discrediting someone from getting PPP Part I and II …again please share at your leisure.
PPP is Forgivable and Tax Deductible for Appropriate Expenses
Some really good news on the tax front. This latest act clarified that businesses will be able to expense their loan proceeds along with forgiveness. Said another way, the loan will be forgiven if used appropriately, and the use of that loan will be allowed to flow through the Income Statement effectively allowing what Congress had originally intended, a double dip use of the money, forgiveness and tax deductions for appropriately used funds.
Stimulus checks – Break In – $600 Seems to be the Number but No Promises!
The most important thing to know from a high-level is if your income didn’t change much and you received a stimulus check earlier this year, it’s likely you will receive another.
The amount of the stimulus check is $600 (or $2000 – becoming more unlikely) and includes all parties including qualified children. As an example a husband and wife with two qualifying children would start out with four checks of $600 or $2400.
The phase outs are very similar, if not almost the exact same as the prior. Which goes to our original statement, if not much has changed and you received an original stimulus check you will probably receive another one but only around the most likely base amount of $600 per person amount.
BREAK IN – Literally as I was Working on this Post – The following hit my Inbox:
Treasury and IRS Begin Delivering the Second Round of Economic Impact Payments to Millions of Americans
WASHINGTON – Today, the Treasury Department and the Internal Revenue Service will begin delivering a second round of Economic Impact Payments to millions of Americans as part of the implementation of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. The initial direct deposit payments may begin arriving as early as tonight for some and will continue into next week. Paper checks will begin to be mailed tomorrow, Wednesday, December 30. This second round of payments will provide critical economic support to those who, through no fault of their own, have been adversely impacted by the COVID-19 pandemic.
“Treasury and the IRS are working with unprecedented speed to issue a second round of Economic Impact Payments to eligible Americans and their families,” said Secretary Steven T. Mnuchin. “These payments are an integral part of our commitment to providing vital additional economic relief to the American people during this unprecedented time.”
Eligible individuals will receive an Economic Impact Payment of up to $600 for individuals or $1200 for married couples and up to $600 for each qualifying child. Generally, if you have adjusted gross income for 2019 up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, you will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.
This second round of payments will be distributed automatically, with no action required for eligible individuals. If additional legislation is enacted to provide for an increased amount, Economic Impact Payments that have been issued will be topped up as quickly as possible.
The swift issuance of this second round of payments follows the successful delivery of more than $270 billion in CARES Act Economic Impact Payments earlier this year, providing crucial economic support to nearly 160 million Americans.
Later this week, you may check the status of your payment at IRS.gov/GetMyPayment. For more information about Economic Impact Payments, please visit IRS.gov/EIP.
This email was from about 5PM Tuesday evening December 29th …. reading todays news just before this post in the AM today, it is still not 100% what amount is going to be sent. Just FYI
Now back to our regularly scheduled Post!
Again we will expand on this in the coming weeks, but primarily wanted to deliver the message about the PPP Part I and PPP Part II scenario.
We apologize for interrupting your holiday season, but felt this was important enough to quickly alert and maybe share some good news to many on the Tax Write Off Front and call to action those that passed on PPP I and may want it or PPP II now!
Have a Great New Year’s … Thanks for your time!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
Another Robert Kaplan Townhall Update – Some Breaking Comments … Slowing Purchases this Year
Back in the fall last year, here we commented on a terrific Robert Kaplan Townhall. Good news, this time we were able to listen to this Townhall which occurred Monday January 11, 2021 without accidentally becoming a participant!
Robert Kaplan is the Dallas Federal Reserve President and is a voting member of the FOMC (Federal Open Market Committee) in 2020 – has a lot of eyes on him, especially during FOMC statements … but – see next
We like to listen to these “Quaint” discussions as more open comments and nuggets of information can be discovered and we are big fans of Kaplan as well…
Kaplan Latest Townhall Comments
Kaplan reiterated an expectation of US Economic growth – if all goes well – of 5% Wow. US Economic growth certainly has easy comparables due to a bad 2020, but a 5% growth rate is really strong and if occurs would help with our Capital Markets growing into their clothes thesis.
Biggest breaking comment, Kaplan believes the FED will at minimum speak of easing on asset purchases and again if all goes well is interested in higher rates later this year – Wow, another big news comment. Recall our concerns if rates get ahead of the Fed and they are forced to chase them down, could be strong headwinds… From our perch this is good news.
Oddly, most major Financial Firms are saying the likely stimulus coming soon will help, but when that runs out a slowing may occur …. someone is wrong !
We will be watching!
Kaplan firmly stated that continued stimulus through asset purchase AND low rates will do more harm than good if continued too long …. We agree, inflated asset prices and excessive risk taking does not work out well.
Best Question – What is Biggest Risk to Economy in 2021?
This question was by far the best and Kaplan’s comment that too slow of Vaccine rollout were both elegantly stated.
Kaplan expressed some concerns with the speed of the current rollout but expected/hoped for acceleration in short order, as we all do.
Kaplan, as a firm believer in higher education, our resident state of Texas is not at the top of the rung on this one, he mentioned several times improving the education system especially as it relates to technology will likely increase productivity in the decades to come.
There you have it, some Breaking News and some Good News!
Have a Great “Kaplan Townhall Update” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
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Posted in Market Comments, Investing/Financial Planning, General Financial Planning, Interest Rates, Economy, Forecast, FOMC
Tagged FOMC, Dallas Federal Reserve, Robert Kaplan, Kaplan, Townhall