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The Coronavirus Aid, Relief and Economic Security Act, referred to as the “CARES Act,” aims to help individuals and businesses impacted negatively by COVID-19. There are still many questions that will require further clarification. However, we want to highlight aspects of the law that could impact you and your loved ones.

Income Tax filing deadline extended. The IRS has extended the federal income tax filing and payment deadlines for the 2019 tax year from April 15 to July 15, 2020. Individual taxpayers who need additional time to file beyond the July 15 deadline can request an extension by filing Form 4868.  Both the Q1 and, and under new guidance, the Q2 estimated payment deadlines have been extended to July 15th.  If you are expecting to receive a refund, you should still file as soon as possible. As we have written previously, filing early can also help reduce your risk for Tax Return Identity Theft. Additionally, the new deadlines apply to Traditional IRA, Roth IRA, SEP IRA and HSA contributions which may be made up until the date you file your return. Nearly all states have followed the new federal guidelines extending their respective income tax filing and payment deadlines for the 2019 tax year. Check with your tax advisor or state tax agencies for those details. More information is also available at https://www.taxadmin.org/state-tax-agencies.

Charitable gifts: To incentivize charitable giving this year, contributions up to $300 for single filers ($600 for married couples) are allowed as an “above-the-line” deduction, regardless of whether the individual itemizes deductions. And for those individuals who itemize their deductions, the general charitable contribution limit of 60% of adjusted gross income for cash contributions has been suspended. This means you can give up to 100% of your adjusted gross income and take a full deduction. The expanded 100% limit for 2020 applies only to charitable contributions made directly to 501©(3) organizations and not donor-advised funds, supporting organizations or private foundations. The rules are complex, and exceptions may apply. You should consult your tax advisors if planning to make any substantial gifts.

Required minimum distributions suspended for 2020: Required minimum distributions (RMDs) from IRAs and corporate retirement plans are suspended for 2020. Note that under last year’s SECURE Act, which we also wrote about previously, the beginning age for distributions was increased from age 70 ½ to age 72 for taxpayers starting their distributions in 2020. Because RMDs are based on the retirement account’s prior year’s ending value, mandating that taxpayers withdraw funds this year would have meant potentially locking in losses before the portfolios have had enough time to recover.

Penalty-free access to Individual Retirement Accounts (IRAs): If you are experiencing hardship due to the COVID -19 crisis, you may withdraw up to $100,000 from your IRAs without imposition of the 10% early withdrawal penalty that would otherwise apply to those under age 59 ½. The withdrawals still will be taxed, but may be spread over three years. Alternatively, if you can repay the distribution amount to an eligible retirement plan within three years, the distribution will be treated as a non-taxable rollover contribution.

401(k) loans: The amount you can borrow from your retirement plan has been increased this year from $50,000 to $100,000. You have 180 days from the date the act was passed, March 27, 2020, to take the loan. Under current IRS rules, those amounts must be repaid within five years, and you are required to pay interest (essentially to yourself) based on federally published rates. Even if your 401k plan currently doesn’t allow for loans or hardship withdrawals, the CARES Act allows retirement plans to adopt these rules with immediate effect. If you are considering the need to withdrawing funds from your retirement accounts, please contact us to discuss the alternatives and the most appropriate strategy for your individual circumstances.

Direct payments: Taxpayers will receive a one-time, direct deposit (to the bank account shown on the last tax return filed) of up to $1,200 for individuals and $2,400 for married couples, plus an additional $500 for each qualifying child. These rebates are phased out for higher-income individuals. The full payments will be available for individuals with incomes up to $75,000 and $150,000 for married couples. This amount is reduced by $5 for every $100 over the income limit above, so it would be fully phased out for single filers with incomes over $99,000 and $198,000 for joint filers, assuming no qualifying children. The U.S. Treasury will determine who is eligible based on the 2019 tax return filing, or if none is available, from the 2018 return. If the payment is more or less than would have been allowed under the 2020 tax filing information, an adjustment will be made to that return. No payments will be made to individuals who are claimed as a dependent.

Unemployment: The program provides $250 billion for an extended unemployment insurance program, and it expands eligibility and offers workers an additional $600 per week for four months, on top of what state programs pay. It also extends unemployment insurance benefits through Dec. 31 for eligible workers. The deal applies to those self-employed and independent contractors.

Housing relief: For those suffering adverse financial impact as a result of COVID-19, the bill provides relief for mortgage payments and foreclosure proceedings if the loan is federally backed, and relief for renters. Mortgage relief will be granted for up to 180 days, a foreclosure moratorium of 60 days and eviction relief for 120 days – at the request of the borrower or renter.

Coronavirus testing: All testing and potential vaccines for COVID-19 will be covered at no cost to patients.

Student loans: The act suspends loan payments automatically for federal student loans through Sept. 30, 2020, with no interest accruing or penalties during the period of suspension.


This article is meant as an overview of certain impacts of the CARES Act. Please consult with your wealth management and tax professionals for a complete discussion on the aspects relevant to your personal circumstances.  The content contained within, or linked to, this article is meant for educational purposes and not meant to be a complete discussion of the CARES Act. There is no assurance that any of the trends mentioned will continue in the future. Market performance cannot be predicted, so nothing in our commentaries is ever meant to provide any kind of guarantee of future results.

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