On March 18, 2020, President Donald Trump signed the Families First Coronavirus Response Act (“FFCRA”) into law. The FFCRA was designed to address several issues caused by the COVID-19 Coronavirus in the United States. Here are 7 Stimulus Benefits that you should be aware:
- Deadline for making 2019 IRA and HSA contributions has been moved to July 15, 2020. (Deadlines associated with contributions to workplace savings plans are not affected.) Therefore, you are still able to fund $6,000 (or $7,000 if over 50 years old) to your IRA if you have not filed your individual 2019 tax return.
- Required minimum distributions (RMD’s) from certain retirement accounts for 2020 have been waived, including 401(k), 403(b), and governmental 457(b) plans as well as SEP IRAs, SIMPLE IRAs, and traditional IRAs. For those that do not need the money, this is a real gift to allow the retirement account time to hopefully recover from the account lows of the 1st quarter 2019.
This waiver also includes the first RMD, which individuals may have delayed from 2019 until April 1, 2020. This relief also applies to beneficiaries of inherited retirement accounts taking only the yearly required minimum distributions.
- For the unfortunate workers who have been laid off, unemployment insurance has been expanded as well. New provisions allow for more people to qualify for benefits and the amount of weekly benefits will be increased. Benefits are also available from the first week of unemployment. Goodbye waiting period.
- For self-employed individuals, the FFCRA provides a tax credit for sick leave and family leave of up to $200 a day or 2/3 of their average daily pay. It also allows for up to $500 a day for emergency paid sick leave for quarantine or testing for COVID-19, or 100% of average daily pay.
- Health insurance coverage has provisions as well. Testing for COVID-19 must be covered by private health insurance without cost sharing. In addition, any vaccines for COVID-19 must be covered without cost sharing. Coverage for telehealth services under Medicare has been expanded. (Let’s hope the telehealth service benefit continues after this crisis is over.)
High deductible health plans with health savings accounts (HSA) will cover telehealth services even if you have not met your annual deductible. For HSA, FSA and health reimbursement accounts, you can now include over-the-counter medicines as qualifying medical expenses that can be reimbursed by these accounts.
- Federal student loan payments can be suspended for 6 months. Any interest on those loans will be waived as well, retroactive to March 13, 2020. Those with student loans should also explore refinancing their loans with the decrease in interest rates.
- Cash charitable contributions beginning in the 2020 tax year allow for a $300 above-the-line deduction made to 501(c)(3) organizations for taxpayers who take the standard deduction. For those that itemize, the deduction amount has been raised from 60% of your adjusted gross income to 100% of gross income. However, the exclusions to this are enhanced deductions for contributions to 509(a)(3) charitable organizations or donor advised funds (DAF).
With all of these items, ask your tax preparer how best to use these tax law changes.
If you enjoyed this article, CLICK HERE to subscribe to free updates from “Roots of Wealth”.
Hope you have a great week!
If you know of anyone that you think would appreciate this post, please don’t hesitate to forward it on.