2021 Tax Updates Part 2: PPP Loans, FSAs, and Other COVID Implications Massage and Bodywork Therapists Need to Know to File in 2022

3d illustration of a dollar sign next to a coronavirus molecule.

By Lisa Bakewell

In Part 1 of this tax update, we discussed stimulus payments and other COVID-related implications for practitioners’ 2021 taxes. Here are additional considerations for when you file your return this year.

NOTE: This article was not written by a tax professional. ABMP does not intend the information in this article to be official tax advice. Please consult a certified tax preparer regarding the material in this article to determine whether it is applicable to your situation.

Keep in mind, the information in this article was current as of January 6, 2022. Since COVID-19 relief efforts are fluid, please check with IRS.gov for up-to-the-minute information.

What If I Used Money From My Retirement Account to Keep Myself Afloat?

If you took money from your retirement account in 2020 due to COVID-related issues, you were not charged the 10 percent penalty tax for early distributions up to $100,000. You also were not subject to the mandatory tax withholding and were given options to repay the money: (a) Pay taxes on the funds by including the withdrawal(s) as taxable income over a three-year period or all at once or (b) replace the missing funds to an IRA or workplace retirement plan within three years.

What About My Flexible Spending Account?

The Fiscal 2021 Omnibus and COVID-19 Relief bill, passed on December 21, 2020, allowed a rollover of unused amounts in health and dependent care flexible savings accounts from 2020–2021 and 2021–2022. This change also allowed employees to make a 2021 mid-year change in contribution amounts.1 No mid-year contribution changes due to COVID will be allowed in 2022 (as of the writing of this article).

I Received a PPP Loan. How Do I Apply For Loan Forgiveness?

The Paycheck Protection Program (PPP) ended on May 31, 2021. Existing borrowers may be eligible for loan forgiveness, which they can apply for once all proceeds are used, or up to the maturity date of the loan. If the forgiveness application is not received within 10 months after the last day of the covered period, the loan payments are no longer deferred, and borrowers should begin making payments. For loan forgiveness information, visit www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-loan-forgiveness.

What About the Employee Retention Credit? Does It Still Apply in 2021?

Yes, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 made a number of changes to the employee retention tax credits previously made available under the CARES Act, including modifying and extending the Employee Retention Credit (ERC) for six months (through June 30, 2021). Eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70 percent of the qualified wages they pay to employees after December 31, 2020, and through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021, thus the maximum ERC amount available is $7,000 per employee, per calendar quarter, for a total of $14,000 in 2021.2

What If I Have Student Loans?

If you have federal student loans, the US Department of Education has automatically paused payments through May 1, 2022. The pause includes the following relief measures for eligible loans: a suspension of loan payments; a 0 percent interest rate; and stopped collections on defaulted loans.3

Helpful Tip:

Experian, TransUnion, and Equifax are offering all US consumers free weekly credit reports through AnnualCreditReport.com, through April 20, 2022, to help you protect your financial health during COVID-19.4

Are There Any Other COVID-Related Tax Changes?

Yes. Two that you may not be aware of are deductions for charitable donations and business meals. For charitable deductions, taxpayers (who take the standard deduction) can claim a cash donation of up to $300 ($600 for married taxpayers filing joint returns).5 Also, the business meal deduction has been increased to 100 percent (up from 50 percent) for food and beverage expenses provided by a restaurant that are paid or incurred in 2021 and 2022.6

Is My Side Work Income Taxable?

Yes. If you earned $400 or more, you owe regular income tax on any monies earned, plus you’ll also have to pay self-employment tax, which amounts to 15.3 percent for your share of your Social Security and Medicare taxes.7

Coming up next:

See more about “gig work” coming up in “2021 Tax Updates Part 3: What Massage and Bodywork Therapists Need to Know About Working in a ‘Gig’ Economy.”

author bio

Lisa Bakewell is a full-time freelance writer and editor. Her areas of writing expertise span a multitude of topics. She can be reached at lbakewell@att.net.


1. Society for Human Resource Management, “Fiscal 2021 Omnibus and Covid-19 Relief,” accessed December 29, 2020, https://tinyurl.com/ypr5fy4n.

2. IRS, “New Law Extends COVID Tax Credit for Employers Who Keep Workers on Payroll,” updated November 23, 2021, www.irs.gov/newsroom/new-law-extends-covid-tax-credit-for-employers-who-keep-workers-on-payroll.

3. Federal Student Aid Office, an office of the US Department of Education, “COVID-19 Emergency Relief and Federal Student Aid,” accessed January 6, 2022, www.studentaid.gov/announcements-events/covid-19.

4. Federal Trade Commission, “Free Weekly Credit Reports During COVID Extended Until April 2022,” March 16, 2021, www.consumer.ftc.gov/blog/2021/03/free-weekly-credit-reports-during-covid-extended-until-april-2022.

5. IRS, “Special $300 Tax Deduction Helps Most People Give to Charity This Year—Even If They Don’t Itemize,” www.irs.gov/newsroom/special-300-tax-deduction-helps-most-people-give-to-charity-this-year-even-if-they-dont-itemize.

6. Society for Human Resource Management, “Fiscal 2021 Omnibus and Covid-19 Relief.”

7. IRS, “Self-Employment Tax (Social Security and Medicare Taxes),” updated December 3, 2021, www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes.


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