Congress included several provisions in the Coronavirus Aid, Relief and Economic Security Act (CARES) that may be of interest to you as year-end approaches.

Charitable deduction for filers that do not itemize

There is an “above the line” deduction for cash charitable contributions up to $300 even if you do not itemize your deductions. Do you have cash charitable contributions of $300 that can be substantiated?  If so, be sure to include that information in your year-end tax information that is provided to us.

Charitable deduction for filers that itemize

The 60% limitation of adjusted gross income (AGI) on cash contributions to qualifying charities for 2020 is suspended, and the limitation is increased it to 100% of AGI. This temporary relief does not apply to non-cash property donated.

Required minimum distributions

Any taxpayer with a required minimum distribution (RMD) due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, may skip their RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.

Early distributions from retirement plans

If you took an early distribution from a qualifying retirement plan you can spread that income over a three year period rather than including all the income in the year of the distribution as long as the distribution meets one of three requirements relating to the COVID-19 and the taxpayer does not make an election to include all the income currently in their income.

Additionally, unrelated to the CARES act, but in response to employees who have had the opportunity to work from home during the pandemic, Ohio’s Senate and Congress both have current bills pending, S.B. 352 and H.B. 754, respectively, that could have an effect on your 2020 city income tax filing requirements. If the bills are passed, they will repeal H.B. 197 Section 29, which will then allow you to request a pro-rated refund from the city that your employer withheld local income tax for, and pay the pro-rated portion of the local income tax withholding tax to the city you lived in while working from home. This calculation is based on the number of days worked at home out of 260 work days in a year. Your employer is required to sign a statement of verification as to the dates that you worked from home. This statement is then attached to your refund request from the city where local income taxes were withheld, along with any additional supporting documentation, such as your W-2. When gathering up your year-end tax information, please provide the number of days worked from home, so we can help in assessing any potential benefit from this law change.

Please reach out to your client service executive if you have any questions regarding the above items.

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