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Hidden Gems in the Consolidated Appropriations Act of 2021

  • BR Accounting And Tax Service

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I hope you have managed to stay safe and well! We focus on resolving tax issues in Prince William County and throughout the lower Northern Virginia area.

As you know by now, the Consolidated Appropriations Act of 2021included several headline provisions, including: $600 stimulus checks, expansion of the Paycheck Protection Program (PPP), and extended unemployment benefits. But are you aware of a some hidden gems that have been placed into the bill as well.

The new law included extender provisions like: five-year extensions for the Work Opportunity, New Markets, and Empowerment Zone credit s, as well the ability of employees to exclude up to $5,250 of student loans paid by the employer. Also included were tax reductions for wine, liquor, spirits, and beer. And an "everything else" category that includes the following:

  • The Employee Retention Credit was often forgotten in the original Coronavirus Aid, Relief, and Economic Security (CARES) Act. With the changes in the CAA, employers can receive a bigger payroll tax credit for keeping employees on the payroll.
  • The new law clarifies that business expenses paid with forgiven PPP loans are tax deductible.
  • The IRC section 179D deduction has been made permanent. This deduction (up to $1.80 per square foot) applies if architect, engineers and contractors are encouraging the green, energy-efficient design of public buildings. This includes improvements to the building envelope, lighting, heating , cooling, ventilation , and hot water systems. Although they may not own the public building, they could be allocated what resembles a free deduction from the government entity . Which is calculated based on square footage, This concept also applies to owners of commercial buildings. IRC section 179D encourages energy-efficient designs while reducing energy costs for all.
  • The 100% deduction for business food and beverage has returned for 2021and 2022. This includes carry-out and delivery meals.
  • FSA has been historically, "use it or lose it ". Requiring employees to spend money in their flexible spending account (FSA) for health or dependent care by year end. The old rules did allow a carryover of unused funds of $560 to 2021. Thanks to the CAA eliminates the healthcare and dependent care carryover limit. Allowing employees to now carry over any unused amount from either the 2020 or 2021plan year to the next year.

We tax professionals are still sifting through the new law to find more information that can help taxpayers save money on taxes within its 5,500+ pages. So stay tuned for forthcoming information, and if you’re unsure about your tax situation this upcoming tax season, we would be happy to help. Please feel free to contact us