As a result of the stimulus package, the following tax credits and provisions will become available to individuals.
Individual Tax Provisions
Tax Filing Deadlines
Sec 2102 - Reinforces the extension of the April 15 filing date to July 15th for individuals. The filing date would be aligned with the extended payment date of July 15th already announced by the IRS.
All individuals are allowed to postpone estimate tax payments due from enactment date until 10/15/2020 without any income caps.
The $250 billion to Expand Unemployment Benefits will:
expand benefits to include self-employed and independent contractors (i.e. Uber drivers and gig workers) during the public health emergency, and gives support to state and local governments and nonprofits, so they can pay unemployment to their employees
increase payments by $600/week through the end of July, AND for those needing it, add an additional 13 weeks of benefits beyond what states typically allow
Temporary Provisions - expansion in unemployment benefits expires at end of 2020 (due to temporary nature of challenge)
Individual Cash Payments
Section 6428- Up to $1,200 per person and $2,400 per married couple. $500 for each qualifying child
individuals with incomes of $75,000 and less and joint filers with $150,000 and less receive full payment
reduction by $5 of each $100 in income over thresholds
complete phase-out $99,000 individuals and $198,000 for joint filers
Ineligible: Nonresident alien individual; person who is a dependent of another; estate or trust The payments are based on 2018 tax return information.
Retirement Fund Rules
Sec 2202 - Distributions & Loans
10% premature early withdrawal penalty waived for distributions from qualified retirement accounts for coronavirus-related purposes
Income on such distributions taxed is over three years
Taxpayer could re-contribute the funds to an eligible retirement plan within 3 years without regard to that year’s contribution cap
More flexible rules provide for loans from certain retirement accounts for corona-related relief
A corona-related distribution is one made to an individual where: 1) he/she, spouse or dependent is diagnosed with COVID-19; or 2) individual suffers adverse financial consequence due to being quarantined, furloughed, laid off, having work hours reduced, closing or reducing a business owned or operated by person due to COVID-19 or other factors to be determined by Treasury. Plan can accept an employee certification that this condition is satisfied. Limit on distributions (from controlled groups) is $100,000.
An increase in the loan distribution amount to the greater of $100,000 (vs $50,000) and 100% (vs 50%) of accrued benefits, with a delay in the start of payments if the starting date is between the date of enactment and 12/31/2020. There is a one-year deferral and adjustment to subsequent payments.
Sec 2203 - Temporarily waives the Required Minimum Distribution (RMD) for 2020 for:
Defined contribution plan described in this subsection or Sec 403(a) or 403(b)
Defined contribution plan in 457(b) but only if maintained by employer described in Sec 457(e)(1)(A)
Other Individual Tax Provisions
Sec 2204: Up to $300 of cash contributions for 2020 allowed for contributions to charities whether taxpayer itemizes or not.
Sec 2206: Exclusion for Certain Employer Payments of Student Loans – applies for any payment of principal or interest made before 1/1/2021 (whether paid to employee or lender)
Denial of a double deduction
Sec 2105: Limitation of deductions for charitable contributions is increased for 2020:
Individual who itemize, the 50% AGI limitation is suspended for 2020
Corporation – 10% net income limit is increased to 25%
Limitation on deductions for contributions of food inventory is increased from 15% to 25%.
Individuals can defer payments on federal student loans and also allows students whose universities have canceled classes to keep Pell Grants.