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Coronavirus Relief Bill and Your Taxes

The coronavirus relief bill passed by Congress includes many tax provisions that can affect your taxes in 2021 and the following years. I will cover the two most popular deductions.

Meals Deduction for 2021 The new Coronavirus tax bill has 100% deduction for business meals and beverages in a restaurant for the next three years, starting January 1, 2021. Proposed regulation issued earlier permits a taxpayer to deduct meal expenses if

  • the expense is not lavish or extravagant under the circumstances;

  • the taxpayer or the taxpayer’s employee is present at the meal; and

  • the meal is provided to a business associate.

A business associate is defined as a person with whom the taxpayer could reasonably expect to engage or deal with in the active conduct of the taxpayer’s business, such as the taxpayer’s customer, client, supplier, employee, agent, partner or professional adviser, whether established or prospective. This regulation does not affect 2020, which generally means your business meals are 50% deductible for tax purposes. PPP-funded expenses are deductible The bill clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a Paycheck Protection Program (PPP) loan. The provision is effective as of the date of enactment of the CARES Act. The provision provides similar treatment for Second Draw PPP loans, effective for tax years ending after the date of enactment of the provision.

One thing I did not find in the new Coronavirus bill: deductibility of the home office expenses for the millions of workers who were forced to work from home in the past 9 months. Somehow this deduction has not made into the bill... Stay tuned.

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