https://turbotax.intuit.com The CARES Act offered taxpayers some relief this year, such as changes to rules for retirement plans and student loans. TurboTax tax expert Lisa Greene-Lewis and TheStreet discuss what the CARES Act may mean for your taxes this year.
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~~~Video Transcript~~~
– [The Street] Among the many things, The Cares Act offered to taxpayers, there was some real perks and abilities to use your retirement plan.
– Lisa, I have all this money in my IRA, I need money at home right now, The Cares Act allowed me to take a little bit out, didn’t it?
– Yes, The Cares Act allowed you to take a big sum of money out by December 31 2020, you could take up to 0,000 out. And if you’re 59 and a half or under, you would not receive the 10% penalty for doing that.
– Right because typically, if you pull money out before 59 and a half, you get you get smacked with not only taxes, but that 10% penalty. And now they also give you the ability to pay the tax back on this money over the course of a period of time. Right?
– [Lisa] Right, you can pay it back in the one lump sum, like normally, or you could pay it back over three years.
– Right so if you took the 100 grand, you can divide it over three payments and pay the tax back over three years, that also makes your tax bill maybe more, you know, easier to swallow. Right. They also said you don’t have to take a minimum required distribution for 2020. Is that correct?
– [Lisa] That is correct. Now, under The Cares Act, you did not have to take that distribution.
– And just to be clear, If I withdrew that 0,000 did I have to show proof that I was affected by Corona or the IRS gonna ask for some sort of identification regarding that?
– Yes, in order to take 100,000 out you did have you do have to be impacted by Coronavirus whether, you know you were sick or quarantined couldn’t go to work, you would have to provide some type of proof.
– Right that makes perfect sense. Okay. There were other relief available as part of The Cares Act and one of them in particular was to students and parents, maybe you could tell us a little bit about that.
– Yes, so if you were a parent or a student and you had a federal student loan, you were able to defer payments all the way through December 31st 2020, allowing you to defer the principal and interest on your student loan. One thing to think about, you know, when you go to do your taxes, you may see that your student loan interest is lower if you elected not to make your student loan payment, but you know, it was providing relief for you when you really needed it.
– Right, and that’s people should look at all that now, again before the end of the year and figure out I guess again, whether or not your student should file his or her own tax return as a result too because the the deduction will be smaller.
– [Lisa] Yes, so a lot of people are considering whether or not to let their college student file their own taxes, you know, if they worked a side job or were employed, because they may be eligible still for some of those education tax credits, and as well as a stimulus payment, possibly if they didn’t get one.
– So at least before I let you go, maybe just tell us about where people can go to on the site to figure all this out. I know TurboTax has a bunch of great calculators and things.
– Yes, to figure all this out, you could go to our Coronavirus Tax Center or we also have our Self-Employed Coronavirus Relief Center. And we also have an Unemployment hub, where there someone one stop shop for people that have been unemployed to help you figure out tax advice and tricks and things you could do by the end of the year to help you save on your taxes as well as all of the hubs have calculators to help you figure out how to save money.
– It’s good stuff and it’s stuff that people should start thinking about because we are encroaching the end of the year. There are some things you could still do before the I guess the ball is gonna fall on December 31st. I don’t know it’s 2020 anything could happen but God willing, it doesn’t we’ve flipped to 2021 but people should be thinking about this now so you’re not caught off guard in April of next year. Lisa Greene Lewis TurboTax expert. Thank you so much for being with us.
