A lot of changes have come about due to the Corona virus-related CARES Act, for the 2020 tax year (filing due in April 2021). For example, Americans who made under $75,000 ($150,000 if married filing jointly) received a $1,200 stimulus check. For most, that will be non-taxable as they will receive a tax credit of the equal amount.
Both the SECURE and the CARES Acts affected retirement accounts. Retirement accounts such as a 401k or IRA typically require a required minimum distribution (RMD) every year for those over 70 1/2 years old. For 2020, that has been waived for contributions up to $5,000, and there will be no penalty for leaving your money in the account.
CARES also allowed those 59 1/2 and under to take out up to $100,000 from their retirement accounts without penalty. However, this is taxable income, so beware.
The SECURE Act also makes it possible for those over 70 1/2 to now make contributions to their IRA. The SECURE Act did tighten up some things, however, and rules for inherited IRAs and workplace retirement accounts mean the funds must be completely withdrawn within ten years.
If you itemize your deductions (many no longer do, due to the increase in the standard deduction when exemptions were instead removed), you can now deduct up to 100% of your AGI for charitable deductions. If you don’t itemize, there will now be an “above the line” deduction for charitable donations up to $300.
With the CARES Act came the PPP loans, which were created to help small businesses stay afloat during COVID. Keep in mind, however, that any of the expenses you paid with funds from the loan are not tax-deductible. Also, if you did get a PPP loan, you may have applied for loan forgiveness, which is currently being processed by the SBA at a snail’s pace.
As of this writing of this post, the due date remains April 15 and has not been extended as it was last year.
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