The Coronavirus Aid, Relief, and Economic Security (‘‘CARES”) Act contains a significant number of provisions that will impact individuals and business related to income taxes.
I can’t list them all so go to the IRS link there is one for personal and business
If a taxpayer didn’t receive the full amount of the Economic Impact Payment for which they were eligible, they may be able to claim the Recovery Rebate Credit when they file in 2021. Individuals do not need to complete information about the Recovery Rebate Credit on tax year 2020 Form 1040 or 1040-SR when filing in 2021, unless eligible to claim an additional credit amount.
Charitable Contribution Changes
The Act provides an opportunity for individual taxpayers claiming the standard deduction to deduct $300 of cash charitable contributions from adjusted gross income.
Early withdrawals from retirement plans and participant loans Certain taxpayers directly impacted by COVID-19 are eligible for withdrawals of up to $100,000 from their qualified retirement plans. These amounts will not be considered income if repaid within three years. There are also rules allowing for loans from plans of up to $100,000, and those participants who already have loans outstanding can defer their repayments for one year. Please read the requirements:
You are a qualified individual if:
You are diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention;
- Your spouse or dependent is diagnosed with SARS-CoV-2 or with COVID-19 by a test approved by the Centers for Disease Control and Prevention;
- You experience adverse financial consequences as a result of being quarantined, being furloughed or laid off, or having work hours reduced due to SARS-CoV-2 or COVID-19;
- You experience adverse financial consequences as a result of being unable to work due to lack of child care due to SARS-CoV-2 or COVID-19; or
- You experience adverse financial consequences as a result of closing or reducing hours of a business that you own or operate due to SARS-CoV-2 or COVID-19.
Waiver of required minimum distributions
The CARES Act provides that no required minimum distribution needs to be taken from IRAs, employer defined contribution plans or 403(b) annuities during 2020. For those who turned age 70 ½ or retired in 2019, 2019 distributions that have not yet been taken do not need to be taken.
Deferral of Employer payroll taxes
The due date for the employer share of employment taxes on OASDI wages (6.2% of wages up to $137,700 for 2020) due on or after March 27, 2020, and before January 1, 2021, is delayed. One half of these taxes will be due in 2021 and the other half will be due in 2022.
Changes to NOLS
The CARES Act has changed the treatment of Net Operating Losses (NOLs) that are generated in tax years 2018, 2019, and 2020 to permit them to be carried back up to five years. This will allow for an immediate claim for refund for taxpayers who had taxable income during the carryback time period. Additionally the limitation of only being able to offset 80% of taxable income has also been removed.