Planning Under the Cares Act
April 8, 2020

Planning Under the Cares Act

by Kathryn Haggitt Fisher

As you have likely heard, Congress passed the CARES Act to manage the impact of the coronavirus. The act is broad, with nearly 900 pages outlining assistance for individuals, businesses, and our nation’s healthcare system. The titling of its six sections will give you a feel for the wide range of issues it addresses.

Title I: Keeping American Workers Paid and Employed Act
Title II: Assistance for American Workers, Families, and Businesses
Title III: Supporting America’s Health Care System in the Fight Against the Coronavirus
Title IV: Economic Stabilization and Assistance to Severely Distressed Sectors of the United States Economy
Title V: Coronavirus Relief Funds
Title VI: Miscellaneous Provisions

A lot of us have more free time than usual these days, but in case you do not want to read through the entire act, we’ve identified several components of the bill that may have the biggest direct impact on you. The following summary is based on our current understanding of the CARES act. Be sure to consult with your accountant or tax advisor before taking any actions.

Stimulus Rebates

Individuals receive a tax credit of $1,200 plus $500 for each qualifying child. However, this begins to phase out at $75,000 for individuals, $150,000 for joint filers, and $112,500 for head-of-household filers. The credit is phased out at 5% for every $100 the AGI exceeds the threshold.

The credit will be paid as an advance refund for your 2019 return and will be distributed via direct deposit. If you haven’t previously provided direct deposit information for refunds, you will receive a mailed check.

Retirement Plan Changes

Required minimum distributions (RMDs) from retirement plans – including inherited IRAs – are suspended for 2020.

In addition, withdrawals of up to $100,000 can be taken from retirement plans penalty-free through the end of the year, but only if you or a spouse or dependent has been diagnosed with COVID-19 or are experiencing adverse financial consequences as a direct result of the pandemic. These are not tax-free distributions, but the income recognition can be spread over a three-year period. Alternatively, if an individual repays the distribution within three years, income recognition can be avoided.

Charitable Giving

The income limitation on charitable giving has been increased from 60% of income to 100% of income for cash donations. Unused charitable deductions can still be carried forward five years. Additionally, there is an above the line deduction for cash gifts of not more than $300. Gifts to donor-advised funds do not qualify for either of these adjustments.

There are additional provisions aimed at helping business owners, involving the treatment of net operating losses, among other things. If you are a business owner, we can bring in your CPA to determine the impact of the CARES Act on your business and, in turn, your personal finances.

To read an in-depth analysis of the impact of the coronavirus shutdown on market performance, please click here.


While the information above is obtained from reliable sources, we do not guarantee its accuracy. This report is limited to the dissemination of general information pertaining to Fulcrum Capital, LLC, including information about our advisory services. This report is not intended to supply tax or legal advice. This information is subject to change without notice. Fulcrum Capital, LLC is an SEC registered investment adviser with its principal place of business in the state of Washington. For additional information about Fulcrum Capital please request our disclosure brochure using the contact information above.
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