The Internal Revenue Service has announced it will reopen the registration period for federal beneficiaries with children who didn’t receive a $500 per child Economic Impact (stimulus) Payment earlier this year.
When to Apply – The IRS urges certain federal benefit recipients to use the IRS.gov Non-Filers tool between August 15 and September 30 to enter information on their qualifying children to receive the supplemental $500 payments.
On March 13, 2020 the President issued an emergency disaster declaration under the Stafford Act as a result of the coronavirus disease pandemic. The disaster area covers all 50 states, the District of Columbia, and five U.S. Territories. As a result, and as was done in the past in the wake of major disasters, including Hurricanes Katrina, Sandy, Harvey and Maria, the IRS is providing special relief that allows employees to donate their unused paid vacation, sick leave, and personal leave time to COVID-19 relief efforts.
Here is how it works: if your employer is participating, you can relinquish any unused and paid vacation time, sick leave and personal leave for cash payments which your employer will donate to COVID-19 relief charitable organizations. The cash payment will not be treated as wages to you and your employer can deduct the amount donated as a business expense. However, since the income isn’t taxable to you, you will not be allowed to claim the donation as a charitable deduction on your tax return. Even so, excluding income is often worth more as tax savings than a potential tax deduction, especially if you generally claim the standard deduction* or you are subject to AGI-based limitations.
The IRS has finally started making those much anticipated Economic Impact Payments, aka “Recovery Rebates.” However, not everyone who was expecting one has received theirs, and some may not be the amount expected.
The Treasury first looked for a filed 2019 return when they began making the payments. If a 2019 return was not filed in time to catch the payment dates, they used the family makeup and income from the 2018 return if one was filed. If neither was filed, then they paid rebates to recipients of Social Security, SSI disability, survivors, Railroad Retirement and veterans’ benefits.
To encourage charitable contributions to deserving qualified charities during these trying times, Congress has relaxed some of its restrictions related to how much a taxpayer can deduct as a charitable contribution in any given year.
Under normal circumstances, cash contributions are limited to 60% of a taxpayer’s adjusted gross income (AGI). However, as has happened in the aftermath of prior disasters such as 2017 hurricanes Harvey, Irma and Maria, the CARES Act has increased the AGI limit to 100% for 2020. Any amount in excess of 100% can be carried over and deducted on subsequent years’ returns until the excess is used up or until five years have passed, whichever happens first.
The CARES Act also created an above-the-line charitable contribution for taxpayers who don’t itemize their deductions. This will allow for a charitable deduction for cash contributions to qualified charities of up to $300 made in 2020.
While generally, the increased charitable contribution limitations related to natural disasters have applied only to contributions to relief efforts specific to the disaster, the only requirement for the CARES Act provisions is that the donations be in cash.
On April 9, 2020, the Federal Reserve announced it would be taking additional steps to support the US economy by providing up to $2.3 trillion in loans, including through the creation of a Main Street Lending Program. This program will support main street businesses by providing financing to lenders that make direct loans to these small to medium-sized companies.
As part of the response to the COVID-19 emergency, this lending facility is meant to support those SMBs who were in good financial standing prior to the pandemic, and who might not have access to broader capital markets or who don’t qualify for the SBA’s Paycheck Protection Program (PPP).
As the whole world grapples with the personal, professional, and economic fallout of the COVID-19 outbreak, we wanted to help our tax and small business clients stay up to date on the latest news affecting them each day. Keep checking back for the top headlines to stay informed.