Summary Of Coronavirus Aid, Relief, And Economic Security Act (“Cares”)
- Individual Rebate Payment. Payments of $1,200 for individual taxpayers, $2,400 filing jointly (plus $500 for each dependent child) for Americans making under $75,000 ($150,000 married filing jointly, head of household $112,500). Payments phase out as income goes up. Individuals with income over $99,000 or married filing jointly over $198,000 will received no payment. Undocumented immigrants filing with TINS will not receive benefit. IRS will look at 2019 tax returns for income eligibility or 2018 returns if 2019 return not filed.
- No Withdrawal Penalty on IRA/401K Up to $100,000. The 10% early withdrawal penalty from qualified retirement accounts is waived for distributions of up to $100,000 if made because individual:
- (1) is diagnosed with COVID-19,
- (2) has a spouse or dependent diagnosed with COVID-19, or
- (3) has adverse financial consequences from being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Treasury Secretary.
Where a tax is due on a withdrawal, taxpayers will have 3 years to pay tax, and may recontribute withdrawn funds to retirement account without any annual cap on contributions.
- Minimum IRA Contribution Waived. Waives required minimum contribution rules for defined contribution plans and IRAs for tax year 2020
- Itemization Charitable Deduction Waived. Itemization of charitable deductions is eliminated for deductions of up to $300 (with the exception of private foundation or donor-advised fund)
- Tax Filing Deadline Extended. The deadline for filing income tax for both federal and New Jersey extended to July 15, 2020
