Special article brought to you by Pinnacle Accountancy Group
At Pinnacle Accountancy Group of Utah, we strive to be TAX ADVISORS, not just tax preparers. We empower our clients with knowledge of new tax laws, so with our help, they can put their families in the position to pay the least amount in taxes. In March, 2020, Congress passed the CARES Act. This goal of this Act was to stimulate the economy immediately through tax incentives.
Recovery Rebates: Individual taxpayers were to receive a $1,200 ($2,400 married) recovery rebate with an additional $500 per child 16 or under. The rebate was based on your 2018 or 2019 tax filings. The $500 per child under 16 is a prepayment of the child tax credit. This means that if you received the rebate, the normal $2,000 child tax credit will be reduced down to $1,500 on the 2020 tax return. There are also income limitations for the rebate. The rebate amount will be reconciled on your 2020 tax return. If your income is higher than the threshold amounts, you may have to pay back some of the rebate with the 2020 tax return.
Retirement Plans: The Act also waives the 10% penalty on early withdrawals up to $100,000 from qualified retirement plans for coronavirus related distributions. The income tax on these types of distributions can be spread over three years and money can be recontributed within three years to avoid any taxes. There are also no Required Minimum Distributions for 2020.
Charitable Contributions: The Act has added a $300 charitable donation deduction for all taxpayers. Normally, only taxpayers who itemize deductions can deduct charitable donations.
Net Operating Loss Carryback: The Act allows for a 5-year carryback of any Net Operating Losses arising in 2018, 2019, and 2020. This means that the loss can be carried back to as far back as 2013 to recover taxes paid in prior years. The State of Utah is also allowing for the 5-year carryback.
If you have questions on how these tax changes may impact you, please call us at the number below. We offer a free review of your prior year tax return and will match or beat your prior year tax preparation fee in most cases.