Trace criterion for a two-by-two idempotent ($P^2=P⟹P\text{ diagonal or }\mathrm{tr}P=1$)

For $P=\left(\begin{array}{cc}a& b\\ c& d\end{array}\right)$, the off-diagonal equations in $P^2=P$ are $b(a+d-1)=c(a+d-1)=0$. Thus either $b=c=0$ or the trace is one. The condition alone is not sufficient: $\left(\begin{array}{cc}1& 1\\ 1& 0\end{array}\right)$ has trace one but is not an idempotent matrix. For a two-by-two matrix of trace one, idempotence is equivalent to zero determinant, by the Cayley-Hamilton theorem.