Relief Under the CARES Act
We hope everyone is healthy and staying safe. During this State of Emergency, we will continue to work, and with a few exceptions, everything will be business as usual. We wanted to help keep you informed on some of the ongoing responses to this current crisis, starting with the CARES Act. The Act was signed into law to provide $2 trillion in relief for individuals and businesses in response to the coronavirus outbreak and some of the provisions may impact you or someone you know.
- Amount: Certain taxpayers may be eligible to receive a one-time direct deposit payment of up to $1,200 for single filers and $2,400 for joint, with an additional $500 for each dependent child.
- Eligibility: To be eligible for the full amount single filers need an adjusted gross income under $75,000 and those who are married and file jointly need an AGI under $150,000. If your income is over your respective “limit” you can still qualify for a lower rebate up to a certain extent. For every $1,000 of income you earned above the limit your rebate will be lessened by $50. The calculator below can help you find out what kind of rebate to expect, but please note if you haven’t filed for 2019 yet the IRS will be using 2018 tax return information, so use that information in the calculator.
- Payment: Rebates will be provided either by direct deposit if that information was provided for tax return purposes, or by a paper check in the mail to the last address on file. For those receiving Social Security or Veterans’ benefits, your rebate should be deposited into the bank account associated with those benefits.
Delayed and Deferred Filing and Payment Dates: The income tax filing date has been delayed from April 15, 2020 until July 15, 2020. This applies to all individuals, trusts and estates, corporations and other non-corporate tax filers. Also, federal income tax payments can be deferred until July 15, 2020 without incurring penalties or interest.
Retirement Plan Changes:
- The 10% penalty for taking early withdrawals from retirement plans has been waived for distributions that are under $100,000 and related to coronavirus purposes. This does not eliminate the tax owed on withdrawals, just the additional penalty for withdrawing early.
- The limit for 401(k) loans taken between March 27 and December 31, 2020 has been increased to $100,000 or 100% of the vested account balance, whichever is lower.
- Required Minimum Distributions for IRAs and 401(k)s have been suspended for the remainder of 2020.
Unemployment Relief: The Act expands unemployment eligibility to include Pandemic Unemployment Insurance. Now, those who are no longer able to work due to the COVID-19 public health emergency may be eligible for temporary unemployment benefits. Compensation for unemployment is determined by individual state programs but the Act is providing workers an additional $600 weekly as “Federal Pandemic Unemployment Compensation.”
Student Loans: Until September 30, 2020 no federal student loan payments are required; no interest will accrue; and there will be no garnishment of wages or tax refunds for debt collection.
New Charitable Tax Incentives: Starting in 2020 individuals will be able to take a $300 above-the-line deduction for cash donations to charities. The Act also expands the limitations on charitable contributions by individuals who itemize, from 60% of adjusted gross income to 100%.
Health Care:A large portion of the Act is aimed at aiding the U.S. health system. Relief will go directly to hospitals, protective equipment, test supplies, increased workforce and training, among other care necessities. For individuals, all testing and potential vaccines for COVID-19 will be covered at no cost to patients.
While we navigate the changes to our everyday lives, please feel free to reach out if you have questions, concerns, or want to begin creating your estate plan. We are currently conducting both our Initial Client Meetings and our Design Meetings on-line via video conference. All you need is a computer with access to email, we will set up everything at our end. This way, you can follow safety guidelines and remain at home. We are also available by phone, (248) 409-0256, for those who are not able to meet over computer/tablet/smartphone.