The new pandemic relief package signed Sunday by President Trump contains good news for truckers, especially those who’ve participated in the Paycheck Protection Program or those eligible for a new round of PPP.
The benefit most specific to long-haul drivers is what appears to be a boost in the per diem deduction to 100% from the current 80%. For typical over-the-road drivers, the change could lower a tax bill by $800 to $1,000, said Michael Schneider and David Campos of owner-operator financial services provider ATBS.
The change would apply to the 2021 and 2022 tax years for meals purchased while working away from home. Because of questions related to language used in the bill, Schneider said, there’s still a need for guidance on the change to be issued by the U.S. Small Business Administration, which administers PPP.
However, much bigger financial aid has been available under the PPP small-business loan program, which is now being extended through March 31 in a new round. What’s being called PPP2 adds $284 billion to the pot. It also changes the first PPP’s $10 million maximum loan amount to $2 million, a limit designed to better target small businesses instead of big corporations that tapped into PPP1 lending.
Also, “the bill ensures the tax deductibility for business expenses paid with forgiven PPP loans,” said ATBS in its newsletter. “The IRS previously had stated these expenses would not be deductible.” That was because the Internal Revenue Service considered it double-dipping to deduct expenses paid for with what was effectively a government grant.
Leased operators and those with operating authority interested in PPP2 loans will have to meet all of these qualifications:
- The business has fewer than 300 employees.
- If the business received a PPP1 loan, it must have used or be planning to use the full amount of that loan.
- The business can demonstrate a drop of at least 25% in gross revenue for any quarter during 2020 compared to the same quarter of 2019.
Based on the average revenue decline of 4% for ATBS clients through the third quarter of 2020, most owner-operators won’t meet that revenue criteria. “However, there are certainly industry segments as well as specific clients who have been harder hit that will qualify for new PPP loans,” the ATBS newsletter said. Some cases will be operators who contracted COVID-19 and missed an extended period of work, Schneider said.
To get a PPP2 loan forgiven, borrowers will have to spend at least 60% of the funds on payroll over a period of eight to 24 weeks that the borrower designates.
To learn more about who would be a good fit for PPP2, read the story at Overdrive.