Off The Record - Special End of Year Alert

OFF THE RECORD

SPECIAL END OF YEAR ALERT

For Businesses, Entrepreneurs & Organizations

WHAT YOU NEED TO KNOW ABOUT THE

LATEST ROUND OF PPP LOANS

Following months of negotiation, on December 21, 2020, Congress passed the Consolidated Appropriations Act of 2021. The mammoth bill, which stretches to over 5,500 pages, expands on the relief provided by the CARES Act and includes many provisions aimed to provide additional relief for those impacted by COVID-19 and to stimulate the economy. This update focuses on an important component of the new Act, the extension of the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration. The changes to the PPP program authorizes a new round of loans, and contains changes impacting both new and existing borrowers.

As you recall, the initial round of PPP loans authorized by the CARES Act quickly ran out of funding, while a second round of loans was available until August 8, 2020. The new Act expands the program again, providing approximately $284 billion for a third round of PPP loans which may be applied for until March 31, 2021. Borrowers who have already received a PPP loan can apply for a second loan of up to $300 million as long as they have 300 employees or less and can show gross receipts in any calendar quarter of 2020 that are at least 25% less than the same quarter in 2019. However, borrowers whose primary business is accommodations and food service that have no more than 300 employees in any physical location are also eligible for these “second draw” loans. In addition, existing borrowers who returned a portion of the funds but have not yet applied for forgiveness may reapply to receive the maximum allocation.

FAMILIES FIRST CORONAVIRUS RESPONSE ACT

EXPIRES DECEMBER 31ST

On December 31, 2020, the Families First Coronavirus Response Act (FFCRA) will expire but the recently signed federal COVID-19 stimulus bill extends the FFCRA payroll tax credits through March 31, 2021. Although employers will not be required to provide employees with paid sick or family leave after December 31, 2020, if they choose to allow employees to take leave for a COVID-19 related reason under the FFCRA framework between January 1 and March 31, 2021, they may still claim the payroll tax credit. Employers should review their FFCRA and leave policies and communicate all COVID-19 leave options to employees moving into 2021.

MARYLAND MINIMUM WAGE

On January 1, 2021, the Maryland minimum wage (except for Montgomery County) will increase to $11.75/hour (for employers with 15 or more employees) and $11.60/hour (for employers with 14 or fewer employees). As of January 1, 2021, Prince George’s County will follow the State minimum wage.

Maryland and Prince George’s County Minimum Wage Rate Schedule

Employers with 15 or more employees

$11.75 per hour effective January 1, 2021

$12.50 per hour effective January 1, 2022

Employers with 14 or fewer employees

$11.60 per hour effective January 1, 2021

$12.20 per hour effective January 1, 2022

*The minimum "Tip Wage" in Maryland (except for Montgomery County) remains at $3.63 per hour for tipped employees. If tipped employees do not make enough in employer-required tip wages plus tips to earn at least the full applicable minimum wage per hour for the workweek, the employer must make up the difference.

Montgomery County Minimum Wage

The most recent Montgomery County minimum wage increases remain in effect until the next scheduled increases on July 1, 2021.

Large Employers (51 or more employees)

$14.00 per hour effective July 1, 2020,

Mid-sized Employers (between 11 and 50 employees)

$13.25 per hour effective July 1, 2020

Small Employers (10 or fewer employees)

$13.00 per hour effective July 1, 2020

*The minimum "Tip Wage" in Montgomery County remains at $4.00 per hour for tipped employees. If tipped employees do not make enough in employer-required tip wages plus tips to earn at least the full applicable minimum wage per hour for the workweek, the employer must make up the difference.

For Individuals & Families

WHAT TO DO WHEN YOU RECEIVE A

STIMULUS CHECK FOR THE DECEASED

Millions of Americans have received stimulus checks in the past few weeks based on their 2018 or 2019 income tax returns. However, the IRS clarified last week that if an individual died before receiving his or her payment, the payment must be returned. For married taxpayers who received a joint stimulus check, if one taxpayer is deceased, half of the stimulus check must be returned.

So how do you return the stimulus payment for someone who died before receiving it? If a paper check was mailed to you, there is a box on the envelope you can check to indicate that the taxpayer is deceased. If you threw out the envelope, you can simply write “void” on the back of the check and send it to the appropriate address. More information can be found on the IRS website under Topic A, QA4 (click here).

If the decedent received a direct deposit to a bank account or you already cashed the paper check, you should submit a personal check or money order made payable to “U.S. Treasury” to the appropriate address and write “2020EIP” and the social security number of the taxpayer in the memo section. You should also enclose a letter stating that the taxpayer died before receiving the check and that is why you are returning it to the Treasury.

THE 2020 CARES ACT CHANGED HOW YOU CAN

DEDUCT YOUR CHARITABLE CONTRIBUTIONS

As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress in March of this year, taxpayers who donate cash to operating charities can take a larger deduction against their income for federal income tax purposes for 2020.

In most years, only taxpayers who itemize their deductions can take a deduction for charitable donations, up to a maximum of 60% of their adjusted gross income (AGI). Taxpayers who take the standard deduction receive no federal income tax benefit for their charitable donations.