Individual Stimulus & Tax Updates
CARES Act Individual Summary
- Tax deadline for payments and filing extended to July 15, 2020. Penalties and interest will not accrue during this period.
- 401K/IRA Hardship Distributions & Loans
- You may withdraw up to $100,000 from your retirement plan and repay the amount over three years with zero tax liability.
- The 10% early withdrawal penalty will not apply.
- If you do not repay the withdrawal within the three-year window, you would be liable to pay income taxes on the withdrawal but would still not be liable for the 10% penalty (essentially eliminating the 10% early withdrawal penalty for the 2020 tax year).
- To qualify for the withdrawal, you, your spouse or a dependent must have been diagnosed with COVID-19, or you must have experienced financial hardships due to being quarantined, laid off, working reduced hours or being unable to work due to lack of childcare or other closures.
- Required minimum distributions (RMDs) have been waived for 2020, allowing taxpayers to hold off on withdrawing funds while the market is experiencing volatility.
- A new $300 above-the-line deduction for charitable contributions has been added for the 2020 tax year. You may take this deduction even if you don’t itemize.
- The income limitation for charitable contributions has been eliminated for the 2020 tax year.
- IRA/HSA 2019 contribution deadlines have been extended until July 15, 2020. These contributions may be tax deductible. The maximum IRA contribution is $6,000 ($7,000 if you’re 50 or older) and the maximum HSA contribution is $3,500 for individuals and $7,000 for families, plus a $1,000 catch-up if you’re 55 or older (you must be covered by a high deductible plan to be eligible for this contribution).
- Taxpayers may receive stimulus checks depending on their income and whether they’ve filed their 2019 or 2018 tax returns. Individuals will receive $1,200 while couples will receive $2,400. Taxpayers will also receive an additional $500 per child. These stimulus payments will start to phase out for individuals with adjusted gross incomes of more than $75,000 and will completely phase out at $99,000 ($150,000 and $198,000 for married filing jointly taxpayers).
- Treasury Secretary Steven Mnuchin has stated on 3/29/20 that people with direct deposit information with the Treasury will begin to see the amounts deposited into their bank accounts. They are creating a web-based system for people to input their direct deposit information so that they can receive the money immediately if the information is not already on file.