First Look at COVID Stimulus Bill

As I write this post, the House and Senate are voting on the last COVID Stimulus bill of 2020 (all 5,593 pages of it).  As you can likely tell, I have not read all pages.  This post will summarize some of the most important parts that farmers should know about now.

First, there is about $13 billion of aid for farmers, likely CFAP #3.  We will do another post on those details later.

Likely the most important news for many farmers is that PPP loan forgiveness expenses are now completely tax deductible.  If you already filed a fiscal year return and did not claim those expenses, you should be able to file an amended tax return to receive a refund.

Qualified self-employed farmers (not sure if this includes partners) who did not have employees and had less than $100,000 of net income in 2019 are now able to receive a PPP loan of up to $20,833 (reduced by any loan already received) based on gross receipts of at least $100,000.  

As an example, assume Jane reported $50,000 of income on her 2019 Schedule F and had $1.5 million of gross receipts.  She received a loan in 2020 of $10,416.  She can now automatically receive an additional $10,417 loan.

Also, if a farmers gross receipts in 2020 for any quarter is less than 75% of the same quarter in 2019, then they can access another PPP loan using the same requirements as the first PPP loan.  Maximum loan is $2 million and businesses with up to 300 employees can apply.

Farmers who had a net operating loss during 2018 or 2019 are now allowed to either carry it back two years; five years; or elect to carry it forward.  IRS will release rules on how to make these elections.

Another round of stimulus payments of $600 per person and $600 per qualifying child with phase-outs based on income levels the same as the first incentive payments.

Farmers who showed a reduction in revenues of at least 20% for any quarter in 2020 versus the same quarter in 2019 may now qualify for an Employee Retention Credit.  This credit can be up to 70% of the first $10,000 of wages for the applicable quarter for each employee.  We will have more details on this in a later post.

These are some of the key provisions for farmers.  There will be more and we will provide additional posts this week.  

I also did another Ag Insights with Chris Hesse today on some of these topics and that video should be available later this week.