Advisor explaining health care documents to senior couple

Tax Planning with CARES ACT

Bethesda Health | October 22, 2020

The Coronavirus Aid, Relief and Economic Security Act, commonly known as the CARES Act contains a number of provisions that may reduce your 2020 income taxes AND help your favorite charities.

Here are some of what the Act provides:

As a result, seniors may want to consider the convenience of using their Bethesda refundable entrance fee or deposit to make such cash gifts to Bethesda this year (before Dec. 30) since their gift will be completely deducible up to 100% of their adjusted gross income.

The CARES Act also allows taxpayers who do not elect to itemize deductions to deduct up to $300 of cash contributions made to qualifying charities from adjusted gross income. Sometimes referred to as an “above-the-line” deduction. The new law excludes contributions to donor-advised funds or to certain private foundations. Excess contributions carried forward from prior years are also excluded from this provision.

Taxpayers impacted by COVID-19 are eligible for withdrawals of up to $100,000 from their qualified retirement plans. These amounts will not be considered income if repaid within three years. There are also rules allowing for loans from plans of up to $100,000, and those participants who already have loans outstanding can defer their repayments for one year.

No required minimum distribution needs to be taken from IRAs, employer defined contribution plans or 403(b) annuities during 2020. For those who turned age 70 ½ or retired in 2019, 2019 distributions that have not yet been taken do not need to be taken.

There may be an opportunity to maximize your recovery rebate if you received a tax rebate payment of $1,200 per taxpayer or $2,400 for married couples filing jointly. The Act also provides a $500 rebate for each qualifying child. These amounts phase out at moderate income levels. The CARES Act provides these and many more provisions for taxpayers. Consult your tax adviser on how you can draw on the advantages of the CARES Act as you make your year-end gifts and prepare your taxes.

Contact the Bethesda Health Group Foundation on how the CARES Act can benefit you.

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