QuickList for 2020
Related to stimulus checks ('Economic Impact Payment') / Coronavirus
US Treasury used taxpayers' 2019 (or 2018) tax returns to determine eligibility for the initial stimulus check. But these were really an advance, based on your 2020 tax situation. Stimulus checks are not taxable.
The 2020 tax return will have a credit recalculation. Taxpayers whose situations have changed (eg, income, dependents, filing now) may be entitled to a larger stimulus amount. Those who would have received less/ineligible DO NOT have to repay any.
Because of the lateness of the second check, unknown right now if the filing season will have any delays as IRS software might need adjustments.
- Taxpayers affected directly or economically by the coronavirus can withdraw up to 10K from retirement accounts without penalty, elect to report the income over 3 years, and have option to reverse distribution during that time.
Retirement-related tax laws:
- Required minimum distributions not required until age 72.
- Contributions to traditional IRA allowed up to age 72.
- Scholarships/educational grants, etc considered compensation for determining allowed IRA contributions.
- Taxpayers with new child/adoption can take up to 5K IRA distribution without penalty.
- Threshold to deduct medical/dental expenses remain at 7.5% adjusted gross income rather than increasing to 10% AGI.
- Deductibility of mortgage insurance premiums extended.
Some other changes:
- Effective for 2020-2021: deduction for cash-like charitable contributions up to $300 as an adjustment for non-itemizers. Effective for 2021 the deduction increases to $600 for joint filing.
- 529 Plan distributions not used for education (ie, classes were cancelled because of the pandemic); can instead be used to pay student loans to avoid being taxed. Limited to 10K lifetime distributions.
- Effective starting 2021, Tuition and Fees Deduction eliminated, but the Lifetime Learning Credit income phaseout will increase to match the AOC phaseout (see adjustment page.)
- Taxapayers can use 2019 taxable income vs 2020 taxable income, if it results in higher earned income credit or additional child tax credit.
- Nontaxable amount of mortgage debt forgiveness reduced from 2M to 750K.
- Business meals occuring at restaurants, 100% deductible (vs 50% previously).