covid-19 individual provisions

Stimulus Check

• Recovery rebates of up to $1,200 for singles, $1,200 for heads of households, and $2,400 for married couples filing jointly — families with children under 17 will also receive an additional$500 per qualifying child.
• Payments are be phased out starting at $75,000 a year. Those earning more than $99,000 would not be eligible. These phase-out numbers double for married couples.
• The only people excluded are those who are behind on child support payments.
• The amount of recovery rebate a taxpayer receives is based on information reported on the taxpayer’s 2019 tax return (or 2018 if the taxpayer has not yet filed a 2019 return). For individuals who did not file a return in either 2018 or 2019, the IRS will use the individual’s 2019 Social Security income. Within 15 days of payment, the IRS will send each eligible taxpayer a letter to a last known address with details of the amount, date and method of payment, along with a number to contact if the taxpayer did not receive the payment.

Unemployment Benefits

• Unemployment benefits have been expanded and now include self-employed and contract workers
• Jobless workers receive an extra weekly boost from the federal government of $600/week in addition to state aid. Self-employed workers, independent contractors and those who typically don’t qualify for unemployment benefits would be eligible
• Unemployment benefits, which run out after six months in most states, will be extended for an additional 13 weeks

Additional Provisions

• Waiver of the 10% penalty on COVID-19-related early distributions from IRAs, 401(k)s and specific other retirement plans
  • The CARES Act waives the 10 percent penalty on early distributions from qualified retirement plans for up to $100,000 of COVID-19-related distributions in 2020. Taxpayers may repay these amounts within three years of withdrawal without regard to that year’s cap. Although these distributions are otherwise taxable for federal income tax purposes, the taxpayer may elect to include the distribution in taxable income ratably over a three-year period.
  • This relief is available to an individual:
    • Who is diagnosed with SARS-CoV-2 or COVID-19;
    • Whose spouse or dependent is diagnosed with such virus; or
    • Who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19 or other factors as determined by the Treasury Secretary.
  • The CARES Act also provides a temporary waiver of the required minimum distribution (RMD) rules for certain retirement plans and accounts. Under this provision, funds related to RMDs normally required to be made by plan participants during 2020 can instead remain in those participants’ accounts.
• Expansion of charitable contribution tax deductions
  • Taxpayers who do not otherwise elect to itemize deductions are allowed an above-the-line deduction in 2020 for up to $300 for charitable contributions made in cash (not stock) to any qualifying Section 501(c)(3) public charity, excluding donor-advised funds.
  • In addition, for individuals who itemize, the CARES Act temporarily increases limitations on deductions for charitable contributions made in 2020. For individuals, the 60 percent of adjusted gross income limitation is suspended for 2020 for cash contributions to qualifying organizations, excluding donor-advised funds. For contributions of food inventory, the limitation is increased from 15 percent to 25 percent. Excess contributions may be carried forward to future years based on the existing charitable contribution carryforward rules.
• Exclusion for certain employer payments of student loans
  • Through December 31, 2020, employers may provide a student loan repayment benefit of up to $5,250 annually to employees tax-free. This extends to both new student loan repayment benefits and other educational assistance provided by an employer under current law.