Covid Briefing… # 21!
1st of May represents the one year anniversary of “The Financial Wave” as you know it! It was created as a briefing at the end of March 2020. I started sending bimonthly Covid-19 email briefings to my clients, family members, friends, consultants (CPAs, lawyers, etc), and influencers we do business with. To commemorate this anniversary, I decided to write this week’s column in a briefing format!
Wave editor Mark Healey was on my mailing list when he called me to write a potential column, and The financial wave was born!
There’s an old saying: “Ignorance is bliss!” My new saying in this Covid-19 era is “Ignorance is very expensive!” In my 30 year career, I have never seen more ignorance and misconduct from consultants. Keep this in mind when you first hear about it.
On March 29, the tax deadlines and proposed changes to tax, gift and estate planning rules were changed significantlyth by Bernie Sanders, which I’ll review below. My “Elite 8” list of changes to worry about is:
- The Federal CARES Act’s one-year hiatus for required withdrawals from IRAs and most 401k will end in 2021: This means that the RMD (Minimum Required Distribution) must be taken in 2021. The amount is based on the age of the account holder. For example, a 72-year-old with an IRA of $ 100,000 will have to withdraw $ 3,906 this year. A 75-year-old must withdraw $ 4,367 this year.
- Obamacare Health Insurance Exchange registration date extended again: This means that the open enrollment period for health insurance will now be extended to Sunday, August 15thth for those who want to enroll.
- The deadline for filing federal and state income tax returns has been extended: These two deadlines have been extended from April 15th to Monday May 17thth.
- Stimulus payments were considered non-taxable: This is important news for Americans who have received one or more stimulus payments. They’re technically considered an advance on a tax credit known as The Recovery Rebate Credit.
- What if you missed a stimulus payment? You can claim it back through Recovery Rebate Credit when you file your 2020 tax return. It’s on line 30 of Form 1040 or 1040-SR. Contact your CPA or tax advisor to do this.
- The PPP application period (Paycheck Protection Program) has been extended: Eligible business owners can apply for required funds by Memorial Day, Monday, May 31stst. If you have any questions about PPP, please email me at [email protected]. We can support you and connect you with banks who want to help my Wave readers for free!
- The CDC (Centers for Disease Control) extended the date of the eviction moratorium: The nationwide ban on certain residential evictions has been extended to at least Wednesday, June 30thth!
- On March 25, 2021, Senator Bernie Sanders presented the “For the 99.5 Percent Act”: These sweeping changes, if enshrined in law, would change the way families give money to their children and dramatically increase the taxes children have to pay within 9 months of their parents’ death! Some of the proposed changes include: A. Reduce the current unlimited gift tax exclusion from $ 15,000 per person to a total of $ 20,000 per year. B. Reduce the current estate tax exemption from US $ 11,700,000 per person to US $ 3,500,000 per person. C. Limit lifetime gifts to a total of $ 1,000,000 per person.
Are you confused already? There has never been a more important time to rely on your advisors. Contact your CPA, attorneys, insurance brokers, investment advisor, and financial planner now to review these monumental changes.
This is what you pay them for, and your money movements will affect your family for years to come! Feel free to ask me for advice [email protected].
Be positive, test negative and keep the faith!