What the Coronavirus Stimulus Means to You

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law to help Americans and U.S. businesses survive the COVID-19 pandemic. Although I’ve downloaded the 247-page bill, I haven’t read all of it yet. However, here are some of the major provisions that might affect you and your family.

The $1,200 and $500 each adult and child, respectively, will be receiving. First of all, not everyone will be receiving this money. The stimulus gives a tax credit to those who filed federal income tax returns in 2018 and/or 2019. So, if a person DID file a tax return in 2018 (or already this year), the tax credit will apply and money will be sent.

Secondly, the $1,200 and $500 amounts are based on the taxpayer’s adjusted gross income (AGI) shown on that 2018 or 2019 federal income tax return. The amount is a $1,200 tax credit per individual and, once the taxpayer’s income exceeds a specified amount, the tax credit is reduced. AGI thresholds are:

  • $75,000 for individual taxpayers
  • $112,500 for taxpayers filing as Head of Household
  • $150,000 for taxpayers who file jointly

My understanding is that the tax credit is reduced by 5% of so much of the AGI that exceeds the above thresholds. Once I read the enter law, I’ll have more info for you about that.

The $600 additional weekly unemployment benefit. The federal government is funding additional unemployment benefits … with limitations. The $600 weekly amount is paid over and above the amount paid by the state, but only in accordance with specific provisions. Some employees will only be eligible for the extra benefit for being unemployed between April 5 and July 31, 2020. Others will be eligible for benefits for a longer period.

The expansion of benefits will apply to the self-employed, independent contractors, people with a short work history, and a few other categories of workers. However, these individuals must meet requirements pertaining to COVID-19, including being diagnosed with coronavirus, being a caretaker for someone with the virus, or losing one’s job because of the pandemic. Other conditions also make a person eligible for unemployment benefits, as well.

Special provisions about retirement plans:

  • Rules for required minimum distributions (RMDs) have been waived for certain retirement plans in calendar year 2020
  • The 10% premature withdrawal penalty for certain qualified plans is waived for distributions from retirement accounts for taxpayers with issues related to COVID-19 (this applies to IRAs, 401(k)s, qualified trusts, qualified annuities, and some defined contribution plans)
  • Certain NON-COVID-19 Medicare telehealth services were expanded

As I read and learn more, I’ll share it here, as well as on my podcast and You-Tube channel.

3 Ways Insurers are Helping Policyholders Affected by COVID-19

The insurance industry is an “essential” business during the coronavirus pandemic and all the related upheaval social distancing and self-quarantining has created. Those of us who are fortunate enough to be able to continue working in the industry are finding as many ways as possible to help those who can’t work, or who can only work limited hours, and are suffering financially.

Please check with your insurance agents and insurance companies to see what assistance is being made available to you. Here are 3 types of help you should be able to obtain immediately with respect to your current insurance policies. In many cases, these actions are MANDATED by federal or state law.

  • Health insurance companies are waiving patient cost-sharing in the forms of deductibles, co-payments, and coinsurance
  • Insurance carriers have suspended the issuance of cancellations for failure to pay premiums when due–for a certain time period (i.e., until May 1)
  • Some insurance carriers are allowing people to extend the due date of premiums due on renewal policies for a certain time IF they call the carrier at a designated phone number to make arrangements

Each insurance company will be responding differently based on a number of factors, so call your agent or insurer to find out what type of assistance is being offered. The National Association of Insurance Commissioners has created a Coronavirus Recourse Center on its website, which can be found here.

Many insurance companies, agencies, and other professionals are publishing and broadcasting all kinds of information to help but take care to be sure you’re listening to a reputable source. As we often see on social media, some individuals thriving on exploiting others.

Feel free to reach out to me with any questions you might have about, and I’ll get you an answer.

Some Smoking New Marijuana Laws

As a freelance writer, I’ve been hired to write content about topics I never contemplated, and/or that don’t hold a personal interest for me. Then, when I dive into the research and put aside any personal feelings about the topic, I find myself swimming in a pool of information that sends meaningful ripples into other areas of my life. The subject of cannabis, and its legalization in the United States is once such topic.

Although I drink (my sister laughs when I say that), I’ve never been drunk. And the only controlled substances I’ve ever taken were those that knocked me out just before undergoing surgery. As you can imagine, any experience I’ve gleaned about alcohol and drugs has been as an observer rather than as a participant. Unfortunately, much of my personal observation was unpleasant and probably had a lot to do with my preference for being [mostly] a teetotaler.

One of the duties I’ve been assigned by one of my clients is to write content for webinars, and the the legalization of marijuana is garnering a great deal of interest. So, for those of you who are interested in what’s up these days, hang onto your hat because the pace with which laws are being proposed and enacted is moving at the speed of light.

As you probably know, federal law lists cannabis on Schedule I of the Controlled Substances Act. Federal law categorizes drugs, substances, and certain chemicals used to make drugs into five different classifications (i.e., Schedules I, II, III, IV, and IV) based upon the medical acceptability of their use and their potential for abuse or dependency. Schedule I drugs are considered by the federal government to have no accepted medical use and a high potential for abuse. Drugs listed in Schedules II through V all have medically accepted uses, and decreasing potential for abuse; they all contain narcotics.

An increasing number of states disagree with the federal government’s opinion about marijuana and THC, the mind-altering (psychoactive) compound in cannabis that generates the high and/or the medical relief some people experience when using it.

Until now, a total of 34 states have legalized the medical use of marijuana. Of those, 11 states have legalized the recreational use of marijuana for adults only. Marijuana is considered illegal in all cases, as it is under federal law, in the states of Idaho, Kansas, Nebraska, and South Dakota.

A total of 17 states have also introduced into their legislative assemblies bills that will legalize the recreational use of marijuana for adults. Those states include Arizona, Delaware, Florida, Hawaii, Iowa, Kentucky, Minnesota, Missouri, New Hampshire, New Mexico, New York, Pennsylvania, Rhode Island, Tennessee, Virginia, West Virginia, Wisconsin, and the U.S. Virgin Islands.

Ten states also have bills that hope to establish medical marijuana programs: Georgia, Indiana, Iowa, Kansas, Kentucky, Nebraska, North Carolina, South Carolina, Tennessee, and Wisconsin.

If you’re interested in keeping up with what’s what from a legal perspective, the National Conference of State Legislatures provides terrific, and current, information at: https://www.ncsl.org/research/civil-and-criminal-justice/marijuana-overview.aspx

One final note to keep in mind about the legalization of marijuana/cannabis: federal law HAS legalized the cultivation of hemp, which is a form of cannabis that contains minimal amounts of THC, but under strict regulation. Anyone who wants to grow hemp MUST be licensed by the state … and not all states have legalized hemp, as the federal government has.

Hemp is not only used for medicinal purposes because of its CBD properties (e.g., protective effects for people with certain types of arthritis and lymph node ailments), it is also used to make paper, textiles, industrial-grade thread, a fiberglass-like material, and in cement. The CBD derived from hemp plants is not mind-altering/psychoactive, and is listed as a Schedule III drug under federal law.


Federal Law Changes that Will Affect Your Tax Return – Part 3

Yesterday and Tuesday I published the first 2 posts of a 3-part series about some of the questions people are asking with respect to recent federal legislation. Specifically, those questions are:

  1. Was Obamacare really declared unconstitutional by the Supreme Court?
  2. Were the required minimum distributions (RMDs) at age 70 ½ from your retirement plan really eliminated?
  3. And how about the threshold for writing off medical expenses–was that also tossed away?

I answered question #1 in Tuesday’s blog post, question #2 in yesterday’s blog post, and will answer question #3 today.

Not everyone knows or understands about the medical expense deduction that can be taken when filing your federal income tax return. Obviously, if you’re in good health and you spent little or no money on medical expenses, it’s not something you would know about. But for people with serious and/or ongoing conditions, and for the self-employed, the costs of medical expenses can be quite high.

The IRS has long allowed individuals who itemize their tax deductions on their federal income tax returns to deduct expenses for medical and dental care for themselves, their spouses, and their dependents. (See the most current IRS Publication 502, or Tax Topic 502 on the IRS website.)

Before the ACA was enacted, the amount of expenses that could be deducted was the total that exceeded 7.5% of the taxpayer’s adjusted gross income. Example:

  • Taxpayer’s AGI was $50,000
  • Total medical and dental expenses paid by the taxpayer for himself and his family during the tax year was $10,000
  • The amount the taxpayer could deduct is $6,250
    • 50,000 x 7.5% threshold = $3,750
    • Deductible amount is the amount OVER $3,750, or $10,000 – $3,750 = $5,250

When the ACA was enacted, the medical expense deduction threshold was increased to 10%, although it didn’t apply to anyone over age 65 until tax year 2017. The Tax Cuts and Jobs Act contained a provision that said the increase in the medical expense deduction threshold would not apply to anyone in tax years 2017 and 2018. This meant the threshold remained at 7.5% for all taxpayers through 12/31/2018.

The recently enacted Taxpayer Certainty and Disaster Relief Act extended the lower 7.5% threshold for medical expense deductions for the 2019 tax year. Clearly, if you don’t itemize on your tax return, this doesn’t affect you. But it does affect many Americans, especially those who are older and have chronic medical conditions.

I hope this series has provided information you can use or pass along. Feel free to reach out to me if there are any other topics you’re interested in learning more about.


Federal Law Changes That Will Affect Your Tax Return – Part 2

Yesterday, I began a 3-part series about some of the questions people are asking about recent federal legislation. Specifically, those questions are:

  1. Was Obamacare really declared unconstitutional by the Supreme Court?
  2. Were the required minimum distributions (RMDs) at age 70 ½ from your retirement plan really eliminated?
  3. And how about the threshold for writing off medical expenses–was that also tossed away?

I answered question #1 in yesterday’s blog post and will answer question #3 in tomorrow’s blog post. Here’s my answer about the changes the SECURE Act brought to required minimum distributions (RMD).

The Setting Every Community Up for Retirement Enhancement (SECURE) Act went into law in December 2019 as part of the Further Consolidated Appropriations Act of 2020. The SECURE Act deals primarily with retirement plans–and a number of changes to those plans, especially to qualified plans.

A qualified retirement plan is established with money that has not been taxed. Examples include an employee depositing money into an IRA or 401(k) with salary before payroll taxes are deducted, or an employer depositing matching funds.

The IRS has long required individuals to begin withdrawing funds from qualified accounts at a specific age. Why? So it can collect taxes on that money! If a person establishes an IRA, or begins contributing to a 401(k) at age 40, the government doesn’t collect any taxes on the funds in these qualified plans until the account holder begins withdrawing the funds. A person can easily build an account with hundreds of thousands of dollars over a lifetime of working.

The required beginning date of a retirement account is the date the account holder MUST begin making withdrawals–withdrawals that will be taxed by the IRS. These withdrawals are called required minimum distributions, or RMDs. For people who turn age 70 ½ on or before January 1, 2020, RMDs must be taken no later than April 1 of the year after the account holder turns age 70 ½.

For example:

  • If my 70th birthday was March 3, 2018, I turned 70 ½ on September 3, 2018. I had to make my first RMD no later than 4/1/2019.
  • If my 70th birthday was October 9, 2018, I turned 70 ½ on April 9, 2019. I have to make my first RMD no later than 4/1/2020.

Per the SECURE Act, the required beginning date was changed to 72 because many people are working longer. But it only changed for those who turn 70 ½ after 1/1/2020. People who turn 70 ½ after 1/1/2020 must begin their RMDs no later than April 1 of the year after they turn age 72. For example, if my 70th birthday is February 21, 2020, I will have to take my first RMD by April 1 of 2023 because that is the year after I turn age 72.

One of the issues concerning this age change is the fact that some people won’t have to make any RMDs in 2020. Here’s a Forbes article that explains this issue in more detail.

One final thing about RMDs. Before the SECURE Act, individuals could not begin a traditional IRA after age 70 ½, nor could they make contributions to it after that age. Now, so long as a person is working and earning income, he or she can open and make contributions to a traditional IRA at any age.

Check back tomorrow for the third and final part of this blog post series: the medical expense deduction threshold.