President Trump recently signed the CARES Act in to law at the end of March. The legislation authorized over $2 Trillion to be used for providing financial relief to individuals and small businesses among others. The information about the legislation has been coming at a furious pace as the government works to determine the best way to faciliate this legislation. To help you sift through the information available, I have provided a few highlights from Cetera about the progams that may have the most impact and provide a benefit to you.
Tax Relief for Individuals:
- Extension of federal tax filing due date. The IRS postponed to July 15, 2020 the due date for both filing an income tax return and for making income tax payments originally due April 15, 2020.
- IRA contribution deadline extended. The deadline for making 2019 IRA contributions has also been extended until July 15, 2020.
- Recovery rebates. Cash payments called “recovery rebates” are available to U.S. residents with income below certain levels who cannot be claimed as a dependent of another taxpayer and who have a Social Security Number. Technically, the rebates are advance refunds of credits against 2020 taxes. The rebate amounts are $1,200 for individuals and $2,400 for married joint filers, with an additional $500 for each qualifying child under age 17. The amount of each rebate phases out by $5 for each $100 of adjusted gross income (AGI) greater than $75,000 (single filers) or $150,000 (married joint filers), based upon AGI as reported on the 2018 federal tax return (or 2019 tax return, if filed). Thus, rebates are fully phased out at $99,000 (single filers) and $198,000 (married joint filers).
- Required minimum distributions (RMDs). All 2020 RMDs from IRAs and retirement plans are waived, including RMDs from inherited IRAs (both traditional and Roth). The RMD waiver includes 2019 RMDs that were previously due by April 1, 2020
- Student Loans. Payments (principal and interest) on federal student loans are suspended through September 30, 2020 without penalty. Interest will not accrue on these loans during this suspension period. In addition, from March 27 through December 31, 2020, an employer may contribute up to $5,250 annually toward an employee’s student loans, and such payment will be excluded from the employee’s income.
These provisions are a small sampling of the potential benefits built into the CARES Act. Please contact our office should you have any questions about your specific situation and how the benefits may apply to you.