For many individuals including US expats, the impacts of COVID-19 have been significant. Fortunately, the IRS is providing some key tax-related benefits individual taxpayers should be aware of.
Coronavirus Rebates
Perhaps the most wide spread benefit is the economic stimulus package payment to individuals. This payment is part of the 2020 Coronavirus Aid , Relief and Economic Security (CARES) Act. Under the CARES Act, eligible individuals will receive a tax credit of $1,200 ($2,400 for married individuals who file a joint return) plus an additional $500 for each qualifying child. This credit begins to phase out for individual taxpayers with an adjusted gross income (AGI) over $75,000, above $150,000 for joint filers and above $112,5000 for heads of households.
It is important to keep in mind that the stimulus rebates issued will not be taxable income. Instead, they are being treated as an advance of refunds of a 2020 tax credit. Once a 2020 US tax return is prepared, taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund received.
While US expats qualify to receive this payment, non-residents, estates and trusts are excluded. In addition, individuals claimed as a dependent of another are not eligible for the payment.
Retirement Plan Distributions
In addition, US taxpayers can take up to $100,000 in coronavirus-related distributions from retirement plans without being subject to the 10% additional tax on early distributions. Eligible distributions are permitted until December 31, 2020. These distributions may be repaid over three years, with any income inclusions and tax spread over three years.
In addition, loans of up to $100,000 may be taken from qualified plans, with repayment delayed for one year and required minimum distributions are suspended for 2020.
Charitable Deductions
For the 2020 tax year, an above-the-line charitable deduction is available (not to exceed $300).
Health Plans
High-deductible health plans are now allowed to cover telehealth and other remote services with charging a deductible. Some over-the-counter items may now be claimed.
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Karlene J. Mulraine, EA, CPA, CA, CPA (NH) is the President of Cross-Border Financial Professional Corporation. Follow us on Linkedin and Twitter, or hang out on Facebook.
The views expressed in this article are those of the author and should not be relied on to make decisions. Consider discussing your specific circumstances with an appropriate specialist.