Tax Relief Provisions for Individuals
Brief summary of tax relief provisions in the Coronavirus Aid, Relief and Economic Security (CARES) Act, and the Families First Coronavirus Response Act as applicable to Individual Taxpayers.
1. Federal Stimulus Checks
Individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. Detailed article on this subject is available at https://www.clickmytax.com/post/covid-19-irs-recovery-rebates.
2. Paid Family / Sick Leave
You can receive two weeks (up to 80 hours) of paid sick leave at 100% of your normal pay if you are unable to work because you are quarantined, and/or experiencing COVID-19 symptoms and seeking a medical diagnosis.
You can receive two weeks (up to 80 hours) of paid sick leave at two-thirds your normal pay if you are unable to work because of a need to care for an individual subject to quarantine, to care for a child whose school is closed or whose child care provider is unavailable for reasons related to COVID-19, and/or you are experiencing substantially similar conditions as specified by the U.S. Department of Health and Human Services.
If you are unable to work because you have to care for your child whose school is closed, or a child care provider is unavailable for reasons related to COVID-19, you may in some instances receive up to an additional 10 weeks of expanded paid family and medical leave at two-thirds your normal pay.
3. Retirement Plan Distributions
If you are affected by the coronavirus and are under 59½, you may withdraw up to $100,000 from your retirement plan or IRA without incurring the 10% premature distribution penalty. Penalty-free distributions are those made after Jan. 1, 2020, and before Dec. 31, 2020.
You qualify for this distribution if you, your spouse or a dependent have been diagnosed with COVID-19 or are experiencing adverse financial consequences as a result of being quarantined, furloughed or laid off, working reduced hours due to the virus, being unable to work due to lack of child care because of the virus, or had to close your business or reduce the amount of hours your business is open.
4. Retirement Plan Loans
Under the current rules, you can generally borrow up to $50,000 from your retirement plan tax-free if you agree to repay it within five years. This relief increases that amount to $100,000. If you have a current plan loan you are repaying in 2020, you will be granted a one-year delay for making that repayment.
5. Required Minimum Distributions
When you reach a certain age, generally 70½, you are required to take a minimum distribution from your IRA or retirement plan. If you are required to take a minimum distribution in 2020, you can choose not to without incurring a penalty.
6. Charitable Contributions
A new above-the-line charitable deduction for 2020 (not to exceed $300) has been introduced to encourage people for donate to the needy during this turbulent time.
7. Health Savings Account
The rules for high-deductible health plans (HDHPs) are amended to allow participants to cover telehealth, coronavirus testing and related services without charging a deductible or cost sharing. Also, over-the-counter items and menstrual care items now qualify as medical expenses.