Updated 04/02/2020
RECOVERY REBATE
- The $1,200 ($2,400 if married filing jointly) “recovery rebate” is a refund of a credit toward your 2020 tax return.
- There is an additional $500 credit for each child.
- To be eligible you must have filed either a 2018 or 2019 federal income tax return.
- For those individuals who may not have filed a 2018 or 2019 return, the government will also be issuing recovery rebates to individuals who received SSA-1099’s or RRB-1099’s.
- If you provided direct deposit information on your 2018 or 2019 income tax return, the check will be directly deposited into your bank account. Otherwise, your check will be mailed to your address.
- The credit will be limited to the lesser of $1,200, or your 2020 tax liability (or $2,400 for a joint return).
- The phase-out begins at the adjusted gross income of $75,000 for single filers, $112,500 for the head of household, and $150,000 for married filing jointly.
- The credit is totally phased out for single filers with adjusted gross income over $99,000, head of household over $136,500 and married filing jointly over $198,000.
- To be eligible for the recovery rebate, you cannot be a non-resident alien, be claimed as a dependent on another taxpayer’s return, a trust or estate, and you must have a Social Security number for each individual.
- Only those individuals with past due child support will not receive checks. Individuals with prior balances due with the IRS or other Federal obligations (ex past due student loan) will not have their checks held.
RETIREMENT PLAN CHANGES
- The 10% penalty on withdrawals, up to $100,000 from qualified retirement plans, has been waived for distributions between the date of March 27, 2020 and December 31, 2020.
- To be eligible for this penalty waiver, you or a member of your family must either be diagnosed with COVID-19, been furloughed from your job, had your hours reduced, be unable to work due to no child care, or had negative financial consequences due to the above.
- The taxability of these distributions will be spread over a 3-year period unless you elect to report it all in 2020.
- If you chose to re-pay an amount withdrawn, you will have three years from the day after the distribution, to repay it, and the distribution will be treated as a qualified rollover within the 60-day period.
- Loans from a qualified plan have been increased from $50,000 to $100,000, and repayment can be delayed by one year.
- Please note the CARES Act waives all required minimum distributions (RMD) for 2020.
CHARITABLE DONATIONS
- On your 2020 tax return, you will be allowed to take up to a $300 above-the-line deduction for cash contributions to qualified charities. This is even for those that do not itemize.
- For tax year 2020, individuals will not be subject to the limitations on 2020 charitable contributions. For corporations, the 10% limit has been increased to 25%. Contributions of food inventory have been increased to 25%, up from 15%.