How the Coronavirus Bill Can Help Us All
Stimulus Rebate Checks
- Individuals with a valid social security number can qualify for a check of $1200/person as well as $500 for each child under the age of 17.
- To find out if you qualify there are income limits the government has set. Below are the adjusted gross income (AGI) brackets that determine tax payer eligibility. If you make more than this your benefit will be reduced.
- Single tax filer: AGI phaseout starts at $75,000
- Head of House: AGI phaseout starts at $112,500
- Married F Joint: AGI phaseout starts at $150,000
- If income is at or below those amounts per tax filing status, each individual will receive $1200/person. If income is over the threshold, your benefit will be deducted $5 per each $100 over the phaseout number.
- Numbers are based on 2019 income if available or IRS will use 2018 income figures.
- Timetable is said to be three weeks until checks will be sent but true timeline is still unknown.
- IRS is said to use banking account information individuals used when filing taxes for return/payment to send the funds.Further guidance is expected to clear up potential issues (moved addresses, changed bank accounts, etc.)
- According to the IRS, you will not have to pay taxes on any rebate check received in 2020.
- The program was expanded to include self-employed and freelance workers that were previously not allowed to file for unemployment.
- Application is still done through each state at their designated websites. Google your state to find out specifics.
- An increase of $600/week was granted through the Stimulus Bill for those receiving unemployment until 7/31/2020.
- Unemployment is limited to last 39 weeks as of the current legislation.
- States can waive the waiting period for unemployment during these times.
- Specific information for each state can be found on their unemployment websites.
401k and Retirement Account Opportunities
- Coronavirus related distributions can be taken from retirement accounts (IRAs, 401ks, 403bs, etc.) up to $100,000 while avoiding the early 10% withdrawal penalty even if you’re under 59 ½. Taxes still must be paid.
- Individual must self-certify how the coronavirus has impacted their income.
- The amount withdrawn from these “coronavirus distributions” can be spread over 3 years for income tax purposes.
- Also, if the amount distributed is paid back into the account within three years, the distribution will avoid the 10% penalty and potentially taxes. An amendment of a tax return may be required to accomplish the strategy. This strategy should be consulted with your advisor & CPA.
- Retirement plan (401k, 403b, etc.) loan amounts have been raised from a maximum of $50,000 to a maximum of $100,000 if amended by the plan document & administrator.
- Required Minimum Distributions (RMD’s) will not be required for 2020 for anyone (including beneficiary IRAs & individuals that are 70 ½ or over in 2020).
Miscellaneous information helpful in the bill
- Individuals wanting to contribute to charity can write off up to $300 in 2020 without having to itemize deductions. This deduction usually requires itemization after the new tax code but has been adjusted for 2020 (possibility longer).
- Women can now use their Health Savings Accounts to pay for menstrual care products (so these products have the potential to be tax deductible if used through an HSA vehicle).
- Student loans (Direct Loans) will be deferred automatically for 6 months and will incur 0% interest during this time until September 30, 2020.
Please be aware that these points are not all inclusive of the coronavirus bill. Please contact your financial planner, accountant, and lender for specific information to your situation. This is general information and every person will have different advice based on their needs.
Patrick Portman is a CERTIFIED FINANCIAL PLANNER™ in Bardstown, KY that helps clients with retirement planning, investment management, business planning, estate planning, and other personal financial planning topics. If interested in seeing how his firm can help your situation, you can contact 502-331-8370 or email firstname.lastname@example.org for a cost-free introductory 30 minute consultation.
Patrick Portman is a Registered Representative offering Securities and Advisory Services throughUNITED PLANNERS FINANCIAL SERVICES Member FINRA, SIPC
Portman Wealth Management and United Planners are not affiliated.