While this legislation addresses many problems arising from the pandemic, we wanted to point out a few aspects that could directly affect to you:
- Individuals earning up to $75,000 a year will be eligible for a $1,200 check. Reduced checks will go out to individuals making up to $99,000 a year (the payment amount falls by $5 for every $100 in income above $75,000). Married couples are eligible for a $2,400 check as long as their adjusted gross income is under $150,000 a year. Reduced checks, on a sliding scale, will go out to married couples who earn up to $198,000. Individuals and married couples also will receive an additional $500 for every child under 17. This is based off of either 2018 or 2019 tax filings.
- The 10% tax penalty on premature distributions of up to $100,000 from qualified retirement accounts, including IRA acct, SEP IRA, 401k & 403b plan, has been waived for 2020 for “coronavirus-related” purposes. The distributions would need to be made between January 1, 2020, and December 31, 2020. The regular taxes on these withdrawals can be paid over three years. In addition, any funds withdrawn may be re-contributed to the plan within three years regardless of contribution limits for that year.
- RMDs are waived for certain retirement plans and IRAs for 2020. This applies to everyone—not just those affected financially by coronavirus illnesses.
- For those taxpayers who do not itemize deductions (only 8% itemized in 2018), they may deduct up to $300 of charitable contributions which will be an above the line deduction. This new rule applies to all years and not just 2020.The 60% AGI limit on gifts to public charities is increased to 100% of AGI for 2020. All carryforward rules apply as normal.
Stay healthy and safe!
Sierra Pacific Financial Advisors, LLC