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Rising Above the Chaos

Consider: CARES Act for Individuals 

Stimulus Payments

Checks or direct deposits coming soon to:

  • Most MARRIED taxpayers whose AGI (Adjusted Gross Income) is $150,000 or less will receive a check or direct deposit of $1,200 per adult and $500 per child under age 17. This amount will be reduced for married taxpayers whose AGI is greater than $150,000.
  • Most HEAD OF HOUSEHOLD taxpayers whose AGI (Adjusted Gross Income) is $112,500 or less will receive a check or direct deposit of $1,200 per adult and $500 per child under age 17. This amount will be reduced for head of household taxpayers whose AGI is greater than $112,500.
  • Most SINGLE taxpayers whose AGI (Adjusted Gross Income) is $75,000 or less will receive a check or direct deposit of $1,200 per adult and $500 per child under age 17. This amount will be reduced for single taxpayers whose AGI is greater than $75,000.

 

Question: How much $ will I receive?

Answer: Use our chart to look up your benefit. Stimulus Payment Benefit Chart

Question: Where do I find my AGI?

Answer: 

    • 2018 Tax Return – Form 1040 Line 7
    • 2019 Tax return – Form 1040 Line 8b

Question: How will the IRS determine the amount that you are eligible for?

Answer: The IRS will look at your 2019 tax return. If your 2019 tax return is not filed yet, the IRS will look at your 2018 tax return. In the absence of a 2018 and 2019 return, the IRS will use Form SSA-1099.

If you are owed more or less than you receive in 2020, the difference will be reconciled on your 2020 tax return.

Question: How will I receive my payment?

Answer: If you have provided direct deposit information on your 2018 or 2019 return, the IRS will issue the payment electronically to the account on file. Otherwise the payment will be issued by check to the address on file.

Question: The IRS does not have my direct deposit information. What can I do?

Answer: In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.

Question: Will the stimulus payment reduce my 2020 refund?

Short Answer: No, the stimulus payment will not reduce a potential 2020 refund.  The stimulus payment is a brand new 2020 credit, being paid in 2020.  A typical credit would be paid in 2021, when you file your tax return.

Long Answer: However, if you received a larger stimulus check than your 2020 AGI dictates (see chart), you may see a reduction in your refund as a result of the reconciliation process described above.

Example: Your 2019 Married Filing Joint return (no children) showed an AGI of $155,000.  The IRS uses $155,000 AGI as a 2020 AGI estimate. Therefore, we expect the IRS will send you a payment of $2,150.

Fast forward to April 2021 when you file your 2020 tax returns. It turned out that your 2020 AGI is actually $150,000 and you should have received a payment of $2,400.  Your return will show that you received a stimulus under-payment of $250 which will increase your potential 2020 refund.

Conversely, if you were under-paid, your refund will increase by the underpayment amount.

IRS Stimulus FAQ

Federal Pandemic Unemployment

Expanded Eligibility.

The CARES Act includes a temporary federal unemployment program which provides unemployment benefits to individuals who would not typically qualify, including:

  • Business Owners
  • Self-Employed Individuals
  • Independent Contractors
  • Gig Workers
  • Those with limited work history and history of wages earned
  • Partially Employed
  • Note: EXCLUDES those with the ability to telework or receive paid-leave benefits.

Benefit.

Qualifying individuals can receive an additional $600 in weekly unemployment benefits for up to 4 months, retroactive to 1/27/2020. The waiting period has been waved.

Where to Apply.

Individuals can apply for benefits with their state agency.
Apply for New York State Unemployment

 

Further Information for New York State:

Summary of Pre-COVID-19 Unemployment

NYS CARES Act Unemployment Guidance 

 

Retirement Accounts

RMD’s Not Required in 2020. 

The CARES Act eliminates the requirement for a retirement plan or IRA owner age 72 and over to make minimum distributions (RMDs) for calendar year 2020.

 

Extended Contribution Deadline.

In addition to the CARES Act, the IRS extended the deadline for contributions to IRA and Qualified Retirement accounts from April 15, 2020 to July 15, 2020 for the 2019 tax year.

 

Before we describe the next 2 options provided by the CARES Act, we caution that the preference is always to avoid prematurely withdrawing retirement funds. That said, the CARES Act is providing easier access to retirement funds:

 

Early Distribution Penalties Waived (In Some Cases).

The CARES Act eliminates the 10% early distribution penalty in some cases.  The distribution is not exempt from income tax, unless the distribution is repaid within three years.

 

Loan Limit Doubled. 

The CARES Act doubled the retirement loan limit from $50,000 to $100,000.

 

Expanded HSA Benefits

 

Expanded Allowable Expenses.

The CARES Act allows HSA funds to be used for telemedicine services as well as over the counter medications and other expenses.  Please check with your HSA Administrator for the expanded list under the new law.

Extended Contribution Deadline.

In addition to the CARES Act, the IRS extended deadlines for contributions to HSA and MSA accounts from April 15, 2020 to July 15, 2020 for the 2019 tax year.

 

 

 

Further Reading

The Kane Firm COVID-19 Resources

The Kane Firm Stimulus Payment Benefit Look Up

IRS Stimulus FAQ

Summary of Pre-COVID-19 Unemployment

NYS CARES Act Unemployment Guidance 


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