Unemployment Benefits and EIDL Updates

ARPA makes Unemployment benefits received in 2020 not subject to federal tax This is a big one for many people: Taxpayers who received unemployment benefits in 2020, and whose modified adjusted gross income was less than $150,000, do not have to pay tax on the first $10,200 in unemployment compensation.

For those who haven't filed yet, the IRS will provide a worksheet for paper filers and work with the software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance. Note that the ARPA law is at the federal level. Unemployment recipients may still owe state or local taxes on unemployment benefits. Check with your tax advisor to discuss your situation. EIDL Loan deferment extension Good news for those of you who received the EIDL 30 year long term disaster loan. The SBA has extended deferment periods for all of its disaster loans, including the COVID-19 EIDL loans. The deferral details differ depending on the calendar year the disaster loan was made. For all SBA disaster loans made in 2020, the first payment due date is 24 months, extended from 12 months, from the date of the note. For all SBA disaster loans made in 2021, the first payment due date is 18 months, extended from 12 months, from the date of the note. Borrowers may voluntarily continue to make payments during the deferment, as interest will continue to accrue on the outstanding loan balance during this period.