Last updated August 4, 2020 by John Posey
The passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act this past March has extended some significant relief in light of the coronavirus pandemic. Here are a few highlights from the bill.
Economic Impact Payment – Depending on your Adjusted Gross Income (AGI) and tax filing status you may be receiving an economic impact payment in the coming months – no action required on your part. In short, if your AGI is less than $150,000 as married filing jointly or less than $75,000 as a single filer, you should expect $2,400 for married couples, $1,200 for individuals and add $500 for each child under 17. For more detailed info, check out this link.
2020 RMD Waiver – Required minimum distributions (RMDs) from IRAs and employer retirement plans have been suspended for 2020. If you will be age 72 or older in the 2020 calendar year, you don’t need to take your RMD. With that said, I would still suggest looking at your tax situation this year to see if it would make sense to still take some money out of your retirement accounts in efforts to effectively use a low tax bracket. Check out this article from Ed Slott on that topic. Right now is a great time to be considering Roth IRA conversions as well.
Did you already take your RMD for 2020? It’s possible you could do a 60-day rollover back to your retirement account if you are still within the 60-day window of the distribution. Another option to return it back to your retirement account could be treating it as a Coronavirus-Related Distribution if eligible. Qualified individuals are those that have been diagnosed by COVID-19, had a spouse or dependents diagnosed or have experienced “adverse financial consequences” as defined in this article.
Owners of inherited IRAs can also suspend their 2020 RMDs, but they have no recourse to rollback RMDs already taken this year.
IRA Deadline Extended until July 15 – The IRS extended the tax filing deadline for 2019 taxes from April to July 15 which also postpones the deadline for 2019 IRA contributions to July 15.
Expanded Charitable Deductions– Adjusted Gross Income (AGI) limits for charitable contributions has been temporarily repealed which effectively increases the limitation from 60% to 100% of AGI for those taxpayers who itemize deductions. In other words, if you itemize (ie - deductible items exceeding the standard deduction of $24,800 married filing jointly, $12,400 filing single) and want to graciously give away more than 60% of your AGI, you can deduct all of it in 2020. The gift must go to a tax-exempt charity to qualify (also known as a 501(c)(3) charity). For the majority of taxpayers that don’t have enough tax deductions to itemize, you can make up to a $300 deductible cash gift to a tax-exempt charity this year. It may not sound like much but I’m certain many good causes would appreciate your support in these challenging times.
Medicare beneficiaries are also to receive a COVID-19 vaccine at no cost when it becomes available. These are just some of the provisions in the new bill often applicable to retirees. There is much more aid applicable to unemployment assistance, student loan borrowers, and small businesses including paycheck protection, economic injury disaster loans, and deferral of payroll taxes to name a few. Click here for the small business owner’s guide to the CARES Act for more info. Also, here are some helpful tips from Creditcards.com for the self-employed that are experiencing financial hardship.
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