By now, most of you have heard about the coronavirus response bill known as the CARES Act. In addition to stimulus checks, tax filing and payment extensions, student loan relief, and expanded unemployment benefits, there are a few “hidden gems” worth noting.
- Charitable Deduction for Non-Itemizers: For 2020 only, any individual who does not itemize deductions may deduct up to $300 in cash contributions made to a public charity. Donations to Donor Advised Funds and non-cash donations do not count.
- Health Savings Account Changes: Participants in health care FSAs and HSAs can now use these funds to purchase over the counter medications without a prescription and menstrual care products. These provisions are retroactive to January 1, 2020 and do not expire (unless changed by future legislation). In addition, high deductible health plans may pay all costs for remote medical care services without imposing a deductible. This change continues through 2020 and 2021.
Many of us are experiencing high levels of stress and anxiety in addition to financial hardship during these uncertain times. Buckhead Church has compiled a comprehensive list of resources to help those who are looking for support. You can find ways to help, resources for food and financial relief, emotional relief resources, and connect with a prayer partner. I also encourage you to continue practicing self-care strategies and stay connected with friends and family.
- Access to Retirement Accounts: If you, your spouse, or your dependent was diagnosed with COVID-19 or is financially harmed by the pandemic, you can withdraw up to $100,000 from your retirement account without the 10% penalty that would normally be assessed if you are under age 59½. This is still taxable income to you, but you can stretch the tax liability over 3 years. The rules regarding taxes are complicated, and there are several factors to consider. We recommend speaking with a CPA and financial advisor before making a decision.
Do you have questions about how the CARES Act impacts you? Need help prioritizing cash flow or making investment decisions? Please don’t hesitate to reach out! We’re here to support you in any way we can.
Stay healthy and take care!
Chloé A. Moore, CFP®
Founder, Financial Staples