Posted on 03/29/2020 8:24:29 AM PDT by texas booster
This is a more detailed discussion of the $1200 socialism starter kit from Congress, how the IRS will interpret the law and how we may get some government dough.
All sorts of twists and turns in the law, please note that there will be several similar discussions on tax forums and accounting forums.
I excerpted only the individual portions of the discussion. Lots more to read.
If only they could have refunded us $8000 each instead of squandering it on the $6 trillion Bush-Obama Endless Wars. Or (God forbid!) pay down the friggin debt!
In reading my comment above, I understand that many FReepers view this stimulus as a mistake, an idea which I share.
However, there are many FReepers and our relatives that honestly need the cash that this pump provides.
While we can decide on the merits of all of the business provisions this post is confines to the narrow discussion of the individual recovery credit, and how professionals think that it may be implemented.
This is all borrowed money from future years that will be paid back in the form of inflation.
So the government is fronting people some of their 2020 tax refund early? Is the money for the JFK Arts thingy also an advance? How could it be if they are a 501c3?
TAX REFUNDS (”rebates”) is exactly what we need followed by TAX CUTS -
NOT “stimulus” spending which stimulates nothing except more government and higher inflation.
Waiver of RMD Requirements
Section 2203 of the law temporarily waives Required Minimum Distributions for calendar year 2020 for a number of retirement plans and individual retirement accounts.
I believe this is my money. I like not having to pull 40 Gs out that I dont need and causing me to be bumped up into the next bracket. At least for 2020
Wish I pushed 2019 RMD into 2020,Oh well,I will take this
Thanks for posting this. First I had heard of this. I had a higher AGI in 2019 than in 2018, so if I file for 2019 I'll get less. I was planning on finalizing and filing my tax return today, but now I'll wait for a couple more weeks. I was planning on filing now so the amount I got would be closer to the final 2020 calculation.
Thank you for posting this.
After paying taxes all year long we still owe almost $10k every year when we file. Does this mean that when I do our 2020 taxes this will be added on and we’ll owe it too? We don’t really need it so was just gonna bank it anyway but jeez.
Between RMDs and IRA withdrawals, I have several clients for whom these provisions may affect.
Keep in mind that since this is treated as a 2020 refundable credit, the tax treatment will depend on your actions this year.
And there are several small rules concerning pulling out money from your IRAs AND 401k (big change), but that it still requires that we pay it back within three years.
I have heard that this will NOT count as taxable income. But if you still owe $10k after making estimated payments, are you below the $100k single/$200k joint AGI maximum level where you will get this stimulus check?
If you made or withdrew too much in 2019, there may be a provision that would allow you to get the $1200 credit by managing your 2020 income to keep it under $75,000 if single, and $150,000 if MFJ. Let's see how this rule is implemented.
Looks like it. And the people who usually get a fairly large refund due to the EITC will get at least $1200 less (and probably more like $2400 less). They won’t be happy about that. But at least it will make the deficit hit less. Just like the government to make the little guy pay...
The question to me is do we have to pay it back on the 2020 tax return if a dependent on your 2019 return is not claimed on the 2020 or something changes in your situation? It sounds like we don’t, but who knows what the rules will be by the time we file for 2020. If it’s done like this, we should be able to opt out of getting the check.
Special Rules for Use of Retirement Funds (§§ 2202, 2203)
Penalty-Free Distributions
Section 2202 of the CARES Act provides that a taxpayer may take up to $100,000 in distributions from a qualified retirement plan without being subject to the 10 percent penalty imposed by IRC § 72(t) if that distribution is “coronavirus-related.”
This includes distributions made on or after January 1, 2020, and before December 31, 2020, to:
individuals diagnosed with COVID-19,
individuals whose spouse or dependent was diagnosed with COVID-19, or
individuals who experience adverse financial consequences as a result of being quarantined, being furloughed or laid off, or having work hours reduced due the virus, being unable to work due to the lack of child care due to the virus, or closing or reducing hours of a business owned or operated by the individual due to the virus.
An individual receiving such a distribution may repay it within three years. In addition, the taxpayer may include the income from the distribution in gross income ratably over a period of three years.
Retirement Plan Loans
The law also relaxes the rules for loans from qualified plans, including temporarily increasing the loan limit from $50,000 to $100,000 and delaying repayment dates for some outstanding loans by one year.
Waiver of RMD Requirements
Section 2203 of the law temporarily waives Required Minimum Distributions for calendar year 2020 for a number of retirement plans and individual retirement accounts.
Charitable Contribution Provisions (§§ 2204, 2205)
Allowance of partial above-the-line deduction for charitable contributions
Section 2204 of the CARES Act provides that taxpayers who do not itemize deductions may take an above-the-line deduction on their 2020 return for qualified charitable contributions in an amount not to exceed $300.
Yeah, it’s all up in the air right now. Call the IRS two different times and get two different answers. Thanks a lot, IRS! I guess it’ll just be wait and see...
I'm thinking that I'm just going to send it back as an estimated payment so I owe less next April. Sending money I didn't work for and haven't become attached to is less painful than my usual April tax check.
I have a 22 year old dependent, we are the only ones on my returns. Will she receive the $1200 adult check or the $500 check or none at all? She has zero income.
My head aches from the IRS-type language! I never did like accounting, or IRS rules, and now I like them less.
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