The Coronavirus Aid, Relief, and Economic Security (CARES) Act affected numerous American's taxes. Here are a few of the significant adjustments and tax breaks introduced by the CARES Act.
2020 Retirement Plan Distributions
One of the biggest changes implemented by the CARES Act is for your customers who take an early circulation from their retirement strategies during 2020. The CARES Act supplies that certified people may deal with a retirement plan circulation as a coronavirus-related circulation. This indicates that up to $100,000 in early distributions made from qualified retirement plans (including IRAs) are not subject to the 10% extra tax that otherwise applies to circulations made prior to an individual reaches age 59 1/2.
Your customers will not be required to take a minimum circulation this year despite their age. This change only impacts tax year 2020.
New Form 8915-E
Each year a brand-new type is developed to report the activity associated with the payments and/or circulations retirement prepares linked to that tax year. Form 8915-A is used to report a certified distribution from 2016, and Form 8915-B is utilized for 2017 repayments and distributions. It will report 2020 distributions subject to the CARES Act, which permits up to $100,000 in distributions to be spread out over 3 years.
Another area impacted by the CARES Act is charitable deductions. The ability to make donations has actually been increased for 2020 as a response to the coronavirus outbreak.
Above-the-line $300 Charitable Deduction
Your customers who take the standard deduction can declare an above-the-line tax deduction for money donations to certified charitable companies. This modification just impacts tax year 2020. The optimum deduction for a family is $300.
Schedule SE (Form 1040)
The CARES Act allows a deferred portion of the self-employed tax. A 3rd page was added to the Schedule SE where this quantity will be computed. This deferred amount will then be reported in the Payments section of Form 1040, Schedule 3, Line 12e as a "Deferral for certain Schedule H or SE filers."