President Biden just signed the American Rescue Plan Act. Many changes are going to affect 2021. We will be sending out those changes in the near future.
One BIG change for 2020 is that unemployment compensation will not be fully taxable. Taxpayers with an adjusted gross income of under $150,000 do not have to include the first $10,200 received per person as income. If you have filed your 2020 tax return and claimed unemployment compensation as income, we will be reaching out to you with the next step to amend your tax return. If we have not finalized your 2020 tax return, we will not be electronically filing your return until our tax software has been updated to reflect this new change.
The next two things we would like to inform you about from the American Rescue Plan Act of 2021 have to do with Restaurants and Health Insurance through the marketplace.
If you get your health insurance coverage through the marketplace and receive a monthly advanced premium tax credit (stipend), when you file your tax return the calculation of what you should receive for a stipend is reconciled against what your actual income was for the year. If you should have received more, you get the excess on your tax return but if you received too much you have to repay part if not all of it on your tax return. For 2020, it appears that you will not have to repay advance premium tax credits. We are waiting on further guidance from the IRS of the new calculation. If we have already filed your tax return and you had to repay a portion of your Premium Tax Credit (PTC) we have pulled your file and will be reaching out to you. If we have not yet finalized your return and you are in this situation, we will not be finalizing your return until the appropriate IRS and tax software updates can be made to properly calculate this change.
Regarding restaurants, there will be a new Restaurant Revitalization Grant through the SBA. This grant applies to all restaurants and is based on your loss due to the pandemic. In short, the amount you are eligible for is the following calculation. Gross receipts from 2019 less gross receipts for 2020 less PPP loans received. The grant is capped at $10,000,000 per entity and is tax free. The application is not available yet, but we advise you to be on the lookout. You will apply through the SBA. More guidance will be coming but we wanted to make you aware. The following is the definition of a restaurant from the act:
(A) means a restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink;