The following is a summary of the relevant individual tax provisions of the Coronavirus Aid, Relief and Economic Security Act.
Individual tax rebates
Rebate checks of $1,200 per taxpayer plus an additional $500 per dependent child will be distributed to certain taxpayers depending on the earned income, Social Security benefits and retirement income of the taxpayer as based on 2019 returns (or 2018, if a 2019 return has not yet been filed). Rebates do not extend to nonresidents, trusts, estates or anyone who can be claimed as a dependent on someone else’s return.
Early withdrawals from retirement plans and participant loans
Taxpayers affected by COVID-19 can withdraw up to $100,000 from a qualified retirement plan before the end of the year, without being subject to the 10% early withdrawal penalty. In addition, a taxpayer can take a participant loan from certain retirement plans for coronavirus-related relief up to the lesser of $100,000 or $100% of the account balance.
Temporary waiver of required minimum distributions
For 2020, the required minimum distributions retirees must take from retirement plans and IRAs are suspended.
Required minimum distributions
For 2020, the required minimum distributions retirees must take from 401(k) plans and IRAs are suspended.
Individual charitable contributions
Taxpayers taking the standard deduction on their personal returns are now eligible to deduct $300 in charitable contributions for cash payments made in 2020 to authorized charitable organizations. This is considered an above-the-line deduction and is available only to taxpayers who do not itemize their deductions.
We will continue to closely monitor the economic and tax changes and communicate important information to you timely and accurately. We are always available by phone or email to address your questions and concerns.