Due to the impact of COVID-19 there have been numerous [temporary] changes to federal income tax law and procedure. Many were part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Others are administrative directives made by the Treasury Secretary. The changes are too extensive to list all of them here. But a few affecting individual taxpayers or their charitable contributions include:
· The deadline for filing calendar 2019 federal income-tax returns, and payment of any tax due, has been delayed from April 15, 2020 to July 15, 2020. Many states have adopted the same schedule but you should check with your state(s) to determine their filing deadline.
· The deadline for making retroactive IRA contributions for 2019 has also been extended to July 15, 2020.
· There will be direct federal recovery payments of $1,200 to individuals ($2,400 for joint taxpayers) and $500 for each dependent child. This payment is phased out for higher income taxpayers. If you have filed your 2019 taxes the IRS will use information from that return to distribute your recovery payment. If you have not filed for 2019 your 2018 federal tax return will be used. The IRS will use Social Security data to generate payments to Social Security recipients who may not have filed federal income taxes for the past two years.
· Mandatory minimum distributions from certain retirement plans/accounts are waived in calendar year 2020.
· There will be a $300 “above-the-line” charitable deduction for donations made during 2020 and claimed on your 2020 return next year. This will allow taxpayers taking the standard deduction to still benefit from a limited charitable deduction in addition to their standard deduction.
· The 60% of AGI (Adjusted Gross Income) limit on individual deduction for cash donations to charity has been lifted for 2020 (although the deduction for all charitable contributions still can not exceed 100% of AGI). For 2020 corporations may deduct up to 25% of taxable income (from 10%). This means itemizers may be able to deduct more of their charitable contributions made this year.
Additional changes in federal income tax law may be made as the COVID-19 pandemic progresses. Please consult with your attorney, accountant, or other tax advisor for more information.
George J. Eigenhauser Jr. is an attorney at law, licensed in the state of California since 1979. He has served on the Winn Board of Directors and as CFA liaison to Winn for more than 10 years. His expertise in the area of wills, trusts and estate planning allows him to assist donors with planned giving decisions. He is also the legislative coordinator for the Cat Fanciers’ Association, Inc. and has served on the CFA board for 15 years.