Tax Law Changes
Here are changes to the tax code that were part of the CARES Act:
If you were impacted by Covid-19 you can make an early withdrawal from a retirement account up to $100,000 without paying the 10% penalty. You do, however, have to pay the income tax (now over a three year period) on the withdrawal, unless you elect to pay the money paid back within three years. You can also delay making payments to loans from a retirement account for up to one year.
The required minimum distribution from retirement accounts is waived for 2020.
If you did not receive an IRS rebate check, all is not lost. The rebates ($1,200 per person, phased out based on income) are an advanced
payment. The actual amount that you qualify for will be determined when you file your 2020 tax return. If you didn’t receive a direct deposit or a check this year, you will receive a credit on your 2020 tax return. If you received a rebate higher than the credit calculation, you do not need to pay back the excess.
You can deduct 100% of your adjusted gross income (AGI) to charity in 2020. If you don’t itemize you can still deduct $300 on your 2020 tax return.
For 2020 only your employer can pay up to $5,250 toward your student loans as a tax-free benefit.
Delano Sherley is a CPA and president of Delano Sherley & Associates, Inc. He can be reached at 513-737-1314.
Delano Sherley & Associates, Inc., 8366 Princeton-Glendale Rd., Suite B5, West Chester, OH 45069. Email Delano@dsacpainc.com Website: www.dsacpainc.com