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CARES Act: Benefits for Individuals

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    The CARES Act was signed on March 27th, and we now have the full details of the relief programs available for individuals and businesses.

    Relief for Individuals

    Stimulus Checks

    • Amounts are based on 2019 tax returns (if they have been filed). If not, they will be based on 2018 tax returns.
    • Single Taxpayers will receive $1,200 each.  This is reduced for individuals making over $75,000 and will be completely phased out for individuals making over $99,000. 
    • Head of Household Taxpayers will receive $1,200 each.  This is reduced for individuals making over $112,500 and will be completely phased out for individuals making over $135,500.
    • Married Filing Jointly Taxpayers will receive $2,400.  This is reduced for couples making over $150,000 and will be completely phased out for couples making over $198,000.
    • Taxpayers who claimed children under 17 as dependents will receive an additional $500 per child.  These tax rebates may also be reduced based on taxpayer income.
    • Individuals who had social security only income and did not have any other tax liabilities, or did not even file a tax return, will still receive a check for $600 each.
    • These stimulus checks are designed as tax rebates for 2020.  The checks will be based on a past return (either 2018 or 2019), but will be reconciled with your 2020 income.  That means that you may receive a reduced rebate check now based on 2019 income, but when you file your 2020 return you may get an additional refund. 
    • The tax rebates will operate very much like the advance premium tax credit for health care premiums. 
    • To qualify, taxpayers and their children need to have social security numbers.
    • How do I get this?  Just wait for the check, or direct deposit from the IRS.

    Retirement Accounts

    • Distributions from retirement accounts are allowed for COVID-19 losses – up to $100,000.  
      • Normally if you take out an early distribution (prior to age 59 1/2) you would pay an additional 10% penalty, and the full amount would count towards ordinary income. 
      • This provision waives the 10% penalty, and you can include the income over 2020, 2021 and 2022 instead of claiming it all in 2020. 
      • You can also repay the distributions back into your retirement plan and not include it in income.

    Tax Return Filing Deadline Extension

    • All individual taxpayers have been given an automatic extension to file their 2019 tax return until July 15, 2020.
    • All individual taxpayers have been given an automatic extension to PAY their 2019 taxes until July 15, 2020.
    • How do I get this?  Everyone gets it.

    Unemployment Benefits

    • If you were employed and are now unemployed, you can claim unemployment benefits.  Typically, you are required to wait one week before making a claim. The new law changes this so you can get unemployment benefits immediately for up to 39 weeks of pay.
    • The new bill also allows payments to include an additional $600 per week.
    • Unemployment claims are higher than they have ever been. It may take a while to get through to a real person.
    • How do I get this?  You’ll need to apply online.

    Other Items

    • Student loan payments will be suspended for three months.
    • Charitable contributions up to $300 can be deducted “above the line”. 
      • This means that you would not need to itemize your deductions in order to claim a deduction. 
      • Anything over $300 would still need to be part of your itemized deductions.
    • HSA accounts can now be used to pay for over the counter medication. 
      • However, it may be more beneficial to leave your HSA funds alone if possible since they have the potential to grow tax-free for years, possibly decades, and then they will be available for major medical expenses. 

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