2021-23: PPP deadline extended and other updates - Spidell

2021-23: PPP deadline extended and other updates


The President has signed H.R. 1799, the PPP Extension Act of 2021. The Act extends the application deadline for both first and second draw PPP loans from March 31 to May 31, 2021.

IRA/HSA extensions

Notice 2021-21 confirms the information previously announced at an IRS Liaison Stakeholder meeting. The May 17, 2021, extended filing deadline for individual returns also extends the deadline for taxpayers to make contributions to their IRAs (including Roth IRAs), HSAs, MSAs, and Coverdell education savings accounts.

The Notice also confirms that first quarter estimated tax payments are still due on April 15, 2021. However, the Notice does not address the unanswered question of what date overpayments from extended 2020 returns will be applied for estimated tax purposes. At this point we recommend practitioners consider that these overpayments may be credited using the May 17, 2021, extended due date, and would apply to second quarter estimates, not first quarter estimates. We will update you on this issue as news develops.

Economic impact payments

The IRS has updated the Get My Payment tool to enable taxpayers to check on the status of their third EIP. That tool can be found at:

www.irs.gov/coronavirus/get-my-payment

The IRS has also issued FAQs that clarify the following:

  • Taxpayers will receive Notice 1444-C, Your Third Economic Impact Payment, to provide information on the amount of their third payment;
  • Payments that aren’t received through direct deposit may be sent by check or a new debit card; and
  • The IRS will continue to process 2020 tax returns and issue additional payments in 2021 to individuals who have not already received a third payment or who are eligible to receive an additional amount if their initial payment was based on their 2019 tax return, but their 2020 tax return (once filed) yields a higher EIP.

Considerations for MFS

Many couples are benefiting from filing MFS to allow them to exclude their unemployment income. However, for couples on Medicare, you must also consider potential Medicare premium surcharges. We have received several comments from practitioners whose clients saved several thousand dollars on their 2020 returns with the UI exclusion and increased Recovery Rebate Credits. Unfortunately, one or both of the spouses were then subject to additional Medicare premiums, which were greater than the tax savings.

Attend Spidell’s Quarterly Tax Update on April 20 and get the latest information on these issues and other federal topicsClick here and register now.