Following are some provisions in the Cares Act:
- Changes related to distributions from retirement
- The tax can be paid ratably over a 3 year period instead of all in the year of distribution
- The 10% early withdrawal penalty is waived for distributions up to $100,000 for coronavirus related purposes during 2020
- The purposes include if you, your spouse or dependent are either diagnosed with COVID-19 or if you experience adverse financial consequences as a result of being quarantined, laid off or having work hours reduced or if unable to work due to lack of child care, etc.
- Can recontribute the funds to an eligible plan within 3 years of the distributions without regard to the annual cap on contributions
- Waiver of Required Minimum Distribution (RMD)
- From IRAs and from certain defined contributions plans
- Generally these begin in the year someone turns 72 during the year if born on or after 7/1/49 or at age 70 ½ if born before 7/1/49
- If you have already taken your 2020 RMD you have 60 days from the date of distribution to put it back. On the 61st day you can no longer redeposit it.
- Contributions to HSAs and IRAs
- The deadline to contribution to HSAs and IRAs for 2019 has been extended to July 15, 2020.
- Charitable contribution ABOVE THE LINE deduction
- Can deduct up to $300 against Adjusted Gross Income if not itemizing
- Must be to an eligible charitable institution (not to an individual)
- This also saves on Ohio taxes
- A higher percentage of charitable contributions
is allowable for 2020
- Any excess is carried forward in each of the succeeding 5 year.
Changes related to Businesses for 2018, 2019 and 2020
- Net Operating Losses: can now be carried back 5 years
- Deductible business losses can be claimed in full against non-business income by taxpayers other than C Corporation. This may result in Net Operating Losses that can now be carried back five years
- More generous amount can be deducted for business interest expense in relation to business interest income
- Qualified improvement property now have a life of 15 years for depreciation purposes. This also makes it eligible for 100% bonus depreciation.