That was quite the week we had and it’s not over yet!

Greetings, clients and friends —

We’re still on the upward slope of COVID-19 disease progression and our hearts go out to all who are impacted, whether suffering through loss, sick, lonely, or anxiety. We hope that you are staying safe and not taking unnecessary risks, following the rules laid down by Gov. Wolf and the suggestions of the CDC and other medical organizations.

As many of you know, President Trump signed a $2 trillion coronavirus relief bill (CARES Act 2020) on Friday March 27, 2020. This email is intended to provide short summary on the impact it will have on individuals. We will have a separate email discussing the business programs. We are currently pushing out updates on our various social media channels; FaceBook, Twitter, LinkedIn and our website https://wernercpa.net/blog/. You can subscribe to our blog to receive notification when we post something.

Individual impacts:

Stimulus Payments

            Who receives one?

• $1,200 per US taxpayer, $2,400 for joint filers. Additional $500 payments for each child under age 17 in the household. Amounts are phased out for taxpayers with an adjusted gross income (AGI) exceeding $75,000, joint filers $150,000 and head of household filers 112,500.

What if my AGI is above the threshold?

• For single filers with an AGI above $75k, your check will be reduced by $5 for every $100 over the threshold. Ex. $80k AGI, your payment will be $950 ($1,200 – $250). For joint filers same calculation but starting at $150k.

What tax year is used to determine eligibility?

• 2019, if that return has not been filed, 2018.

How will checks arrive?

• If the IRS has your bank information on file from your 2018 or 2019 filing, they will submit payments via direct deposit. If that method is rejected because the account no longer exists, they will mail you a check.

Will retirees receive a payment?

• Yes, if you are receiving social security payments, you will receive a payment. If you are not required to file a return because income levels too low, you will still qualify.

Is this payment taxable?

• No.

What if I haven’t filed for 2019 but my income is lower than in 2018?

• You will apply any unused additional credit on your 2020 return.

Retirement provisions:

• Waiver of 2020 required minimum distributions (RMDs) from IRAs and retirement plans. Planning note, if you are having federal withholding from your RMD and plan on not taking one in 2020, contact our office to discuss making estimated tax payments.
• Hardship withdraws, waives the 10% penalty for early withdraws up to $100k.
• 401k loans, increases the loan limits from $50k to $100k or the lessor of 100% of the present value of vested balance. Loan must be made 180 days following CARES Act enactment.

Miscellaneous items

• Existing IRS installment agreements. If you’re under a current installment agreement, payments due April 1 through July 15, 2020 are suspended. The IRS will not default any Installment Agreement during this same period, interest will continue to accrue on unpaid balance.
• Charitable Contributions. The Act is relaxing some of the limitations on charitable contributions by allowing a deduction up to $300, whether the you itemize deductions. Suspending the 50% limitation on individuals.
• Student Loans. Suspends payment on federally held student loans until 9/30/2020. Interest will NOT accrue during this period.

Our intent is to help you stay up-to date about the efforts of the various governments to help you through this troubling time.

Please be careful and call or email us if you have any questions.