The CARES Act Individual Provisions

Here is a quick summary of the most important provisions of the CARES act for individuals.

RECOVERY REBATES

$1,200 for individuals; $2,400 for married couples + $500 per child under 17
Phase-out based on income (AGI) on 2019 tax return; if 2019 tax return has not been filed, based on AGI on 2018 tax return
- $150,000 for married filing jointly (phase-out to $0 at $198,000)
- $75,000 for individuals (phase-out to $0 at $99,000)
To be paid “as soon as possible,” but not likely before May
- Social Security recipients to where they get SS checks
- Direct deposit to wherever taxpayer received 2018/2019 refund
- Otherwise sent to last known address on file
If underpayment of rebate based on 2020 income/tax return, additional rebate paid next year. If overpayment, no adjustment on “excess” payment.

Allows withdrawals from IRAs or employer retirement plans up to $100,000 in 2020 if experiencing adverse financial consequences of COVID-19
- Exempt from 10% early withdrawal penalty
- Not subject to mandatory tax withholding
- Eligible to be repaid over 3 years
Withdrawals are taxable; income can be spread over 3 years
- Loans from employer-sponsored retirement plans expanded
- Maximum loan increased from $50,000 to $100,000
Repayments delayed for up to one year
- Mandatory RMDs suspended for 2020
- Applies to IRA, 401(k), 403(b), Inherited IRA
- RMDs may be able to be “returned”
  - If RMD already taken within 60 days, RMD can be “returned”
  - If RMD taken beyond 60 days, RMD can be “returned” if individual can show negative impact from COVID-19
  - “Return” option not available for beneficiaries of Inherited IRAs who have already taken their RMD in 2020

Eligibility extended beyond W-2 employees to self-employed and contractors and people who have been furloughed
Elimination of 1-week waiting period
“Regular” state unemployment benefit increased by $600/week for up to 4 months; paid by Federal government ($425 in DC pending)
Extension of benefits for additional 13 weeks

Definition of medical expenses expanded for HSAs and FSAs —
- Includes over-the-counter medication
- Includes menstrual care products
Medicare beneficiaries eligible for COVID-19 vaccine (when available) at no cost
Telehealth services may be temporarily covered by an HSA-eligible HDHP before a participant has met their deductible

There is a new “above-the-line” deduction for up to $300 of qualified charitable deductions (for taxpayers who do not itemize)

“Coronavirus Aid, Relief, and Economic Security (CARES) Act – Summary” by Fran Goldman. Used with permission.

An earlier version of this article had $115,000 for the start of phase-outs for married couples. The corrected value is $150,000.