Well, much has changed since the last time we've talked. With any luck and perhaps some medical and divine intervention, we'll be well on our way to recovery. Recently, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress. Just in case you have not made yourself familiar with what this is I wanted to use this time to make sure we're all on the same page. By now, the rebates should have been paid out. Should. So just a very brief recap on what you should have received.
Recovery rebates for individuals. $1,200/taxpayer + additional $500/qualifying child
Phase-out. 5% of AGI over $150k joint, $75k single, $122,500 HOH
Tax returns. Based on SSNs for each family member referencing 2019 or 2018 returns, typically.
Payments. Checks/direct deposits
Pay back’zies. Also, no.
Whew! That was quick, so that’s it?
Not even close
Ok, what else do you got?
Waiver of Required Minimum Distribution (RMD) for 2020
Yep. You do not need to make your RMD for 2020, even if you turned 70.5 in 2019 and elected to defer your first distribution until before April 1, 2020.
What if you are younger, any “perks”?
Yes. Waiver of the 10% early withdrawal penalty from retirement accounts such as 401k or IRA and can be spread out over 3 years.
I have been giving to charities, anything for us?
Also, yes. You get a $300 above-the-line deduction (means even if you don’t itemize, you still get that deduction). Then the 60% AGI limitation for charitable deductions has been eliminated for 2020.
Any medical type stuff included?
Yes, although not as exciting. High deductible plans can pay expenses for tele-health and other remote services without regard to the deductible plan amount. HSA, FSA, and HRA payouts are treated as paid for medical care even if they’re not a prescription.
Business…there’s always something for business.
This gets very detailed very quickly, so the top points are...
· Delayed employer payroll taxes
· Pension funding delay
· Accelerated credits-paid sick and family leave
· SBA loan debt forgiveness
· NOL liberalizations
Of course all of this assumes that you, your family, or your business has been economically impacted by the COVID-19 pandemic… I know, I know, but technicality there could be someone out there.
Wait, wait, wait what about the tax season delay stuff?
So there was an automatic tax season extension until July 15th both Federal and California.
So what’s that mean again?
It means that filing July 10 is the equivalent to filing “April 10” (in a normal year). Including payments and estimates, AND IRA contributions for 2019. If you are filing after July 15th you will need to do an extension.
Sweet! Hey, what about the 2nd quarter estimated payments? Those are due July 15th.
Very true and as of the time of this writing, that is still the case, but if it hasn’t changed, I would be on the lookout for a shift in 2020 Q2 estimates.
Stay Healthy, Stay Safe