So, the CARES act. All those little changes. Today, we’ll talk about a few we haven’t really discussed.
No, I won’t be talking about the fact that $ 1+ billion of our money was distributed to the dead. Because the IRS failed to check the social security roster before sending out those $1200 stimulus checks. (Oh, goody. It also means TheDonald sent his self-serving message that it was HE that provided us this stimulus, like he provided the 435 votes in the House and 100 in the Senate, to the dead. [He’s still hoping they’ll vote for him.] Maybe we can personally bill him now for the postage for that waste of federal dollars.)
Here’s another great benefit. Y’all know that there are 14 days left to file your taxes this year. Because the IRS extended the date to the 15th of July. Well, here’s something I bet you didn’t know.
Because of the way the filing season deadline was extended- and the fact that no one (but me) ever reads the tax code- there’s a present for all of you folks who are due a refund. Not only will you be getting your refund, you will also be receiving a TAXABLE interest payment on that refund dating from the 15th of April to the date of your refund. The interest rate for 15 April to 30 June is 5%; it drops to 3% by the third quarter (1 July).
Here’s the third item. Since it’s not clear if there will be a second set of stimulus payments (to the live citizens, not the dead ones), the IRS is adjusting the rules by which we can raid the piggy bank (retirement accounts).
The initial rules stipulated that one had to be directly affected by COVID-19. (That meant either the taxpayer, the spouse, or a dependent tested positive for SARS-CoV-2.) Now, we just have to be affected by the pandemic (or have a spouse or dependent so affected).
That means if you lost your job or your spouse did (live-in partner and adult children who moved back into the house also count), suffered adversely due to being quarantined, can’t work because you can’t find child care, or even if you now work fewer hours- you can raid the retirement cookie jar.
Oh, wait, there’s more- if your employment offer was rescinded- you are absolved. There won’t be a penalty imposed on those withdrawals- as long as they don’t exceed $ 100K.
That means if the taxpayer is not yet 59.5 y of age, there is no 10% early withdrawal penalty. (That was set up to prevent folks from robbing the retirement plans before the proper time.) Nor will the plan have to withhold 20% of the withdrawal to cover any potential taxes- because the taxpayer as up to 3 years to pay those taxes.
Want more info? Check IRS Notice 2020-50
This will be helpful for all those who are confused about the current tax scenario in US.
You have away of simplifying complex stuff
Thank you so much, Dr. A!
My late mother in law was one of those who got the check – and the letter. She keeps getting mailings from the Republican Party (which she supported) asking her to sign petitions and send money. Now I know how many more deceased people got those checks. Our EA had to research how to return the check properly because there wasn’t even a set process at first.
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Yeah, I made a “return stimulus” form for our clients’ (dead) parents. So, they wouldn’t get in trouble down the road.
Oh, that’s wonderful! I bet that will help a lot of people. Hoping for a second stimulus check, too.
I’m with you, Jeanine!
WOW, insightful post. I’ve tried to keep up with this whole CARE’s Act, PPP, etc. Just so I’d know enough to be dangerous (and advise people who asked to seek out a professional tax person). I pretty much gave up when the rules started changing what seemed like EVERY STINKING DAY!
Thanks for sharing.
Oh, by the way, I wanted to read your article on QB shown in the left menu, it doesn’t appear to be a clickable link.
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Yes, those are not clickable (thanks to WP rules). But, you can search QB (spelled out or abbreviated) in the query (the search function) and you will find this article which I think is what you want: https://www.adjuvancy.com/wordpress/2011/06/20/business-manager/
thanks as always for information I did not know (though guessing DH would have.. but at least I can discuss this more knowledgeably!!)
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Glad to oblige, Vidya.
thanks, Roy vary interesting however is sounds like my wife (age 69) and myself (age 80) will be out of luck the next time around because so far we are following the rules and staying away from groups of people, wearing the masks, washing often and have avoided the virus so far. Because of our age, we are not looking for work although we do add a little to our income from the eggs produced from our chickens Its the pocket change that does not cover the cost of their feed. So we don’t seen to fit into any of the rules that will allow us to be included if there is another round of checks.
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I do presume you received a stimulus payment, though, ChefWilliam.
The CARES act showed more CARE of the super wealthy than of anyone else. That tax break for the 43,000 richest Americans of about $1.6 million each… was that really necessary? And why were millions of people completely excluded from the stimulus payments? And no, I’m not counting on a more equitable stimulus program. :/
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I’m just curious, Alice- who were excluded from the stimulus? Those who made more money?
Yes, the CARES act removed the limitation on income to carry back losses (which I did and do oppose)- but many construction companies (and they are generally smaller businesses) began seeing business fade away in December- carrying their losses back means cash in their pocket now.
I already raded my cookie jar with the chocolate chip cookies I made the other day!
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And you saved me none!