Pub. 2 2020 Issue 5

M A Y / J U N E 2 0 2 0 12 nebraska cpas J U L Y / A U G U S T 2 0 2 0 CPA INSIDER: TAX NEWS FROM THE IRS BY SHARON KREIDER, CPA Keeping upwith changes has been difficult, with the 2020 tax season lasting so (impossibly) long. And then, throughout the extra-long tax season, the Paycheck Protection Program (PPP) loans consumed our time and energy. With these urgent distractions, we didn’t have much time to keep up with news from the IRS. Here are a few items of interest for you and your clients. 1. Economic Impact Payment Notice. Remind your clients to keep Notice 1444, “Your Economic Impact Payment.” Your clients may not know this is an important document. They will need the Notice if they qualify for a larger Impact Payment when they file their 2020 tax return. The client may be entitled to a bit more rebate if they have a baby in 2020 or less income (after all, a lot of people are unemployed because of the pandemic). 2. Early Bird RMDs. Did your client take their RMD early in the year, not knowing that CARES would waive the 2020 RMD? The IRS has a solution. The taxpayer can redeposit the withdrawal by August 31, 2020. Most taxpayers were allowed to redeposit an early RMD by July 15. Notice 2020-51 gives the “early birds” more time to gather up funds to put the RMD back. The Notice provides that this repayment is not subject to the one rollover per 12-month period limitation or the restriction on rollovers for inherited IRAs. Read Notice 2020-51 at https://www.irs.gov/ pub/irs-drop/n-20-51.pdf. P lann i ng. Becaus e of t he economy, many clients may want/need to keep the money they withdrew from their IRA or retirement account for themselves or their kids. The client has an option to return the money to their retirement account. 3. COVID-19 IRAandRetirement Plan Withdrawa ls. Not ice 2020-50 was released to help retirement plan participants affected by COVID-19 take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans. This includes expanding the categories of individuals eligible for these t ypes of d i s t r ibut ions and loans (referred to as “qualified individuals”). Read Notice 2020- 50 at https://www.irs.gov/pub/ irs-drop/n-20-50.pdf. A qu a l i f ied i nd i v idu a l i s one who: • is diagnosed, or whose spouse or dependent is diagnosed, with COVID-19 by a test approved by the CDC or FDA, or • e x p e r i e n c e s a d v e r s e financial consequences as a result of the individual, the individual’s spouse, or a member of the individual’s h o u s e h o l d ( s ome o n e who shares the principal residence): 1. being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19,