The Coronavirus Aid, Relief and Economic Security (CARES) Act, which became law in March 2020 - and its extended relief bill passed in December 2020 - included numerous provisions designed to help individuals and businesses as the economy suffered during the COVID-19 pandemic.
Many of these provisions can affect your taxes for 2020. For example:
• Recovery rebate credit for stimulus payments - If you didn't receive one or both of the $1,200 and $600 stimulus payments and are eligible for them, you can still get them as a refundable credit on your 2020 tax return.
• Retirement provisions - Eligible individuals may take COVID-19 related distributions of up to $100,000 from IRAs during 2020 without incurring the usual penalty for early withdrawal.
• The required minimum distribution (RMD) is waived for 2020 for seniors and their beneficiaries.
• New charitable deduction provisions - If you don’t itemize deductions on your return, you may take an additional above-the-line deduction of up to $300 in charitable deductions.
• Expanding use of health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursements accounts (HRAs) by allowing additional expenditures - like over-the-counter drugs, menstrual products and telehealth - from HSAs, HRAs and some FSAs. The act also allows balances in FSAs to be rolled into 2021.
Coming in February: changes to student loan provisions and more.
For help with these tax changes and other ways the CARES Act affects your taxes, contact David Kreider at H & R Block, 520-625-8732, for an appointment.