NEW ITEMS TO NOTE FOR 2020 TAX RETURNS

NEW ITEMS TO NOTE FOR 2020 TAX RETURNS:

RECOVERY REBATE CREDIT – New line item for claiming a recovery rebate credit (Economic Impact Payment) if one was not received or qualify for an additional amount based on 2020 income

NEW CHARITABLE DEDUCTION ALLOWANCE FOR THOSE THAT USE THE STANDARD DEDUCTION :  Up to $300 allowed for cash contributions to a qualifying organization for taxpayers using the standard deduction

FOR HEALTH SAVINGS PLANS, FLEXIBLE SPENDING ARRANGEMENTS & HEALTH REIMBURSEMENT ARRANGEMENTS QUALIFIED MEDICAL EXPENSES EXPANDED – Now over the counter medications without a prescription and the cost of menstrual care products qualify; the limit on unused health FSA carryover amounts increased from $500 to $550

RETIREMENT PLAN DISTRIBUTION RELIEF FOR 2020:

  • 2020 distributions taken if impacted by COVID-19 of up to $100,000 could be taken out and not subject to the 10% penalty for early withdrawal
  • Can be contributed back to retirement plan within 3 years and treated as a direct rollover
  • Can be included in income ratably over 3 years unless elected otherwise
  • RMDs not required for 2020

QUALIFIED IMPROVEMENT PROPERTY FOR LEASEHOLD, RESTAURANT AND RETAIL IMPROVEMENTS

  • Can now retroactively be depreciated over 15 years instead of 39 years and qualifies for 100% bonus depreciation
  • Can amend 2018 and 2019 tax returns or take as a change of accounting method adjustment in the current year

NET OPERATING LOSS RULES REPEALED

  • Temporarily repeals 80% taxable income limit for NOLs
  • NOLs in 2018 – 2020 can now be carried back 5 years