As mentioned last week here in this announcement post, in brevity form, due to the Holidays near the end of the year, an additional stimulus act, was actually signed into law on a weekend (Sunday December 27th, 2020 to be exact)
This new stimulus bill called “The Appropriations Act of 2021” is a massive over 5000 page document, that touches many parts of the economy but most importantly for us … made a second round of PPP II, Paycheck Protection Program funds available.
25% Any Quarter Y/Y Sales Decrease, PPP I before PPP II
The two most important points to know about the second round of the paycheck protection program are as follows:
- In order to receive a second round of PPP payments you must have had a 25% decrease in sales in any one quarter in year 2020 versus the same quarter in 2019.
- The second most important item to know, is in order to have qualified to take the second round of the PPP II, program you must have taken the first round and used it. If you have not taken the first round you will be forced into taking the first round PPP I before you can get to the second round.
Tax Deduction Clarity
The massive page bill also clarified the ability to write off the loan for tax purposes. Said another way even though the loan is forgiven, as long as the loan was used appropriately, entities will be able to write those expenses off of their taxes effectively making what some call a double dip possible, which was congress’s original intention, but became confused by several IRS statements.
Employee Headcount, Max Loan, Looser Usage
A few other miscellaneous items include lowering of the threshold from 500 to 300 employees, limiting the maximum amount of the forgivable loan to a maximum of $2 million versus the higher amount in the original program, and more flexible spending options versus the mandatory 75% payroll usage in PPP I.
$150k Easy File Forgiveness Threshold
One last item included in the bill was a threshold of a basically $150K for non-invasive forgiveness. What that means if someone had taken the PPP loan of $150K or less, in either part one or part two you were basically have a simple one page document where are you certified you use the funds appropriately and the entity which you receive the loan is not to request any further documents. This does not mean that the small business Association cannot audit in the future but is meant to make the forgiveness program fluid and easy. Think twice of initiating any loan just over the $150k hurdle as the hassle may not be worth the extra funds.
Have a Great “PPP II Updated” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
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SPECIAL CARE ACT EDITION – PLEASE SHARE – Q 2 2020 Newsletter Video Audio Podcast Review By John Kvale
Click Here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page
Let’s get going!
Just so you know this was hurried with a call before and just after this video, so it was not edited as normal … but wanted to get this out to as many as possible as fast as possible… Never claimed to be a Spielberg .. haha … prompt, complete delivery of this information was very important at the moment!
Thanks in advance!
Q 2 2020 Newsletter
The CARE ACT –
On Friday March 27th 2020, a stimulus package was passed into law for the benefit of those being effected by the Corona Virus officially starting the clock for many programs.
The general spirit of the most important parts of the bill is getting money into the hands of consumers quickly AND attempting to incentivize employers to keep workers on the payroll!
Recovery Rebate
Checks Being Sent to Over 90% of the population
Each person to receive $1200, kids UNDER age 17 credited to parents at $500 each, no limit in headcount.
This Rebate is NOT TAXABLE!
The payout is likely to be sent out end of April or early May!
The applicable AGI phase out threshold amounts are as follows:
One time Maximum $100k IRA Distribution Available in 2020 Only
Investors affected by the Corona Virus can take a maximum of $100k of a Corona Virus impacted distribution from your IRA or Employer related plans.
You can repay this distribution within three years and have NO TAXES. You may stagger payback contributions over any time frame as long as you pay all of it back within three years of the day you received the distribution in order not to have taxes due on the distribution.
RMD’s (Required Minimum Distributions) Waived in 2020
All RMD’s for any and all mandatory plans are waived as of 2020.
This includes all types of RMD’s including those with the five year rule.
Next year will not mandate a doubling of the RMD.
Next years RMD will be on the higher mandated level, but again will not cause a duplicate.
One Off Charitable Deduction – Small – Available Only to Non Itemizers
Included in the new Coronal Stimulus package is a one time above the line, Charitable Donation Write off of $300.
This amount is only available to those who do not itemize.
Pandemic Unemployment Insurance Benefit
A New Pandemic Unemployment Benefit available to those effected by the Corona Virus.
This benefit is additionally available to those that may not have had access before, mainly self-employed individuals.
This new benefit is $600/week and lasts for four months.
There is also the elimination of the first week waiting period, allowing those immediate access if needed.
Student Loan Deferral
No payments required until September 30th of 2020!
No interest will accrue during the interim.
Must notify your loan provider if you are on automatic payment.
Paycheck Protection Program – AKA SBA Loan Program
Forgiveness loan that can be totally FREE to small business owners if they qualify and use the funds appropriately. If not, they will receive a possible 10 year term, 4% maximum interest rate from the Small Business Association, happily administered by qualified local banks in an attempt to speed the process of getting the loans to business owners.
The purpose of this loan is too keep your people employed!
Available for business owners of less than 500 people who were or have been adversely affected by the Corona Virus.
Must certify Good Faith that the business has been affected by the Virus. Which can include uncertainty of the future.
Must be applied for by June 30, 2020!
Repayments will not commence until at least six months and no longer than twelve months.
Loan amount is the lesser of $10 mllion or 2.5 times your average monthly payroll in 2019 – EXCLUDING AMOUNTS OVER $100K ANNUALLY
Capital Market Update –
Bonds are so good they are Bad
Given the speed of the equity stock, drop due to the ever expanding Coronavirus. Investors were caught flat-footed and in a dash for cash, sold their old faithful bond holdings which are viewed favorably again due to their safety.
Using history as our guide, not only does this correct itself, but also likely turns out to go even higher in value, which is what happens when rates go down and bonds go up.
In closing, one more bit of good news in almost all cases we will have reinvestment of income at these lower prices, taking advantage of that pricing for our own benefit.
We hope you enjoy … talk to you in the Summer !!!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com
-96.808100
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Posted in Audio, Care Act, General Financial Planning, Investing/Financial Planning, Market Comments, Newsletters, Podcast, Political, Video
Tagged Care Act, No RMD, Pandemic Insurance, PPP, RMD, Unemployment Insurance