Amid all of the doom and gloom related to the continuing COVID-19 pandemic, on December 21 Congress provided a ray of hope with a $900 billion stimulus package—just in time for the holidays. While there are provisions in the bill for individuals, healthcare workers and small businesses, there are some particular perks for freelancers—especially if you participated in the Paycheck Protection Program (PPP) loans from the last two rounds of pandemic-related stimulus funding.
This bill is not yet final, meaning there could still be some changes, however, here are the provisions of the current relief package which may impact your freelance taxes:
The second round of PPP loans is reportedly limited to businesses with fewer than 300 employees with at least a 25% decrease in revenue during the first, second or third quarter of 2020. It also reduces the amount a borrower can receive from $10 million to $2 million. While there are not concrete details yet, this new bill would also give businesses more flexibility on how they spend PPP funds and further simplify the forgiveness process for loans under $150,000.
The bill also earmarks $12 billion for minority-owned businesses and expands eligibility to more nonprofits under the PPP loan program.
There is likely to be additional information and details coming out over the next several days and weeks about how this and previous rounds of PPP loans will be treated from a tax perspective.
Watch for additional updates on this relief bill as more details and IRS guidance becomes available .
Jonathan Medows is a certified public accountant licensed in New York, New Jersey, Maryland, and Pennsylvania. He is also a recognized expert in taxation for freelancers and the self-employed—often tapped for his expert knowledge and perspective on self-employment taxation by national and regional publications such as The New York Post, BusinessWeek, Forbes taxation blog, WebCPA, CPA Practice Advisor, and others. You can read some of Jonathan’s press coverage here.
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