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Florida Tax and Estate Planning and the CARES Act

While many portions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act focus on providing relief to businesses and employees, there are several provisions that apply to tax and estate planning as well.

First, the CARES Act increases the ability to take charitable deductions on your income tax return. Starting in the 2020 tax year, individuals who do not itemize may claim a $300 charitable income tax deduction for cash gifts to public charities. For those who do itemize, the CARES Act removes the 60 percent adjusted gross income limitation for cash contributions to public charities. Itemizers may now deduct up to 100 percent of their 2020 AGI for qualifying cash contributions.

Whether you itemize or not, you must remember three things about these charitable deductions:

  • They apply only to contributions made by December 31, 2020.
  • Only cash contributions count. Donations of stock, real estate, vehicles or other property do not count.
  • The contributions must be made to public charities, not private foundations.

Second, the CARES Act alters several aspects of retirement plan distributions. Qualified individuals are allowed, before the end of 2020, to withdraw up to $100,000 from an IRA or other retirement plan while enjoying the following benefits:

  • Distributions will not incur the 10 percent early distribution penalty for people under age 59 ½.
  • Federal income taxes do not have to be withheld.
  • No tax needs to be paid so long as you repay the distribution in the next three years. If you do not to pay it back within that time, you can spread out the income tax payments over three years.

You are a qualified individual if you or your spouse:

  • is diagnosed with COVID-19;
  • cannot work because you have to provide child care;
  • have been laid off or have had work hours or salaries reduced

The CARES Act also suspended required minimum distributions (RMDs) from retirement plans for 2020. You will not be required to take an RMD this year. However, if you already took your RMD, you cannot put the money back in your account except under very limited circumstances that you should discuss with your tax professional.

The charitable giving and retirement distribution provisions of the CARES Act are just two of the ways in which the law may be relevant to estate planning. The best thing you can do is speak with a Florida lawyer before the end of 2020 to discuss what, if anything, you should do to take advantage of its benefits.

The estate planning attorneys at Bankier, Arlen & Snelling Law Group, PLLC in Delray Beach are all Certified Public Accountants as well as estate planning attorneys well versed in gift and estate law, and we would be happy to provide advice and recommend actions you can take regarding the CARES Act and your specific estate and tax planning situation.  Call  M. Adam Bankier at 561-278-3110, Robert M. Arlen, Esq. at 561-279-1880 or Linda L. Snelling, Esq. at 561-501-7778 or contact us online to arrange a virtual meeting or phone conversation to get the process started.  We serve clients throughout South Florida.

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