What does the recent stimulus package include?

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTRA) aka “Coronavirus Stimulus 2.0” passed Congress on December 21, 2020, as part of the 5,000+ page Consolidated Appropriations Act of 2021. It extends and amends various expiring tax provisions and has a number of provisions that may impact you.

  • The most prominent feature was a fresh round of $600 stimulus checks for certain taxpayers. If you qualify and haven’t received a check, you will get your $600 as a refundable tax credit when you file your 2020 tax return.
  • Unemployment benefits were extended (including another $300/week of unemployment insurance relief for 11 weeks).
  • Extension of the 100%-of-AGI limit on cash contributions to a charity into 2021.
  • Allows one to carry forward unused Flexible Spending Account balances all the way through 2022.
  • Reduces “permanently” the hurdle for Medical Expense Deductions to 7.5%-of-AGI.
  • To help restaurants and entertainment venues, allows deductions for 100% of meals and entertainment expenses.
  • Eliminates the Tuition and Related Expenses deduction for education and replaces it with an expanded Lifetime Learning Credit, and more.
  • For 2021, allows taxpayers that do NOT itemize to claim a $600 per couple ($300 for singles) tax deduction for charitable contributions in addition to the standard deduction. The deduction was limited to a total of $300 whether filing a single or a joint return in 2020.
  • Small businesses that experienced at least a 20% decline in quarterly revenue may get an expanded Employee Retention Tax Credit (potentially up to $7,000/employee/quarter).
  • Creates a second forgivable Paycheck Protection Program (PPP2) loan program for small businesses if revenue was down by at least 25% in any quarter of 2020.

On the other hand, it’s notable that some 2020 provisions were not continued. Most notably, penalty free Covid-related Distributions from IRAs and retirement accounts are gone and Required Minimum Distributions from such accounts are back in 2021.

New tool to combat identity theft

The IRS’ Identity Protection PIN program for victims of identity theft is now open to anyone that wishes to voluntarily opt into the “IP PIN program.” Crooks had been electronically filing tax returns and claiming refunds using unknowing victims’ Social Security numbers.  Learn more and get an Identity Protection PIN (IP PIN) directly from the IRS here.

Here are a few key things to know about the IP PIN Opt-In program.

  • This is a voluntary program.
  • Taxpayers must pass a rigorous identity verification process.
  • Spouses and dependents are eligible for an IP PIN if they can verify their identities.
  • An IP PIN is valid for a calendar year.
  • People must get a new IP PIN each filing season.
  • The online IP PIN tool is offline between November and mid-January each year.
  • Correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays.
  • Taxpayers should never share their IP PIN with anyone but their trusted tax provider.
  • The IRS will never call, text or email requesting your IP PIN.
  • People should beware of scams to steal their IP PIN.
  • There currently is no opt-out option but the IRS is working on one for 2022.

Making News…


Charles E. Fitzgerald, CFP with Moisand Fitzgerald TamayoWe continue to help the Orlando Sentinel with reader questions by participating in a free call-in hotline and its Ask An Expert feature. (Some links require a subscription to view.) Mike Salmon, CFP®, Charlie Fitzgerald, CFP®, Derrick Chandler, CFP®, and Tommy Lucas, CFP® participated in and answered questions from callers and some of their answers have been published in recent issues of the paper.

Derrick explained the tax implications of receiving unemployment. With interest rates so low many homeowners are exploring refinancing. In a January piece, Derrick explains how some banks are lowering the interest rate on mortgages with no fees or refinancing costs in order to keep the business.

Mike laid out some of the options a man in his early 70s has for his 401(k) while still working part time. Meanwhile, Charlie gave some guidance to a 30-year-old that has been a diligent saver on what to do with the funds accumulated.

Dan Moisand,CFP® continues to write for MarketWatchFlorida Todayand Financial Advisor. Click on the links to read some of his published articles:

Financial Q&A: I’ve got some money for an IRA — which one’s the best?

Required Minimum Distributions are back in 2021

If I inherit a Roth IRA, are the distributions taxed?

My daughters inherited my ex-wife’s 401(k), should they convert it to a Roth?

Should I load up on big companies? Should I sell big companies?

What’s the best way to reduce the taxes on my estate?

Age based tax code quirks that can trip you up

Can I reverse a Roth conversion?

I’d like to donate my RMD to my church — how does that work?

Tax-planning opportunities that expire Dec 31, 2020

In the News…


Kevin McDermott, CPAWelcome aboard Kevin McDermott, CPA! Kevin McDermott, CPA will be joining us beginning March 1st in the position of Tax Manager. Kevin will help prepare and review tax returns for MFT clients and help with other tax related work our tax team does. For instance, we handle IRS inquiries on behalf of our clients and perform extensive tax projections for many of our clients which enable us to deliver precisely on our tax strategies.

Brokerages, banks, insurance companies and other “advisers” typically talk about taxes but won’t stand behind what they say because they technically don’t give tax advice. Their fine print disclosure will say they are not tax advisers and nothing they say should be construed as tax advice. Giving advice and standing by it is a truly unique offering for a financial planning firm.

Charlie was quoted extensively in a CNBC article “Is silver the next Gamestop? Social media may fuel speculation about the surge in silver prices. “… it’s speculative trading. It can turn on you badly,” Fitzgerald said. “During moments of panic and speculation, it will separate from reality. You’ll get huge spikes. It’s emotion buying,” he added. “And gravity will bring it back down to reality.”

The Journal of Financial Planning gave Dan some kudos. His June cover article, “Surviving a Bear Attack” was selected as one of the Best of 2020 in a special issue of the publication. Dan also learned the article was being translated for inclusion in the Financial Planning Association of Malaysia’s member publication.

Things We Found of Note


$8,000 – Average net worth of millennials. (Business Insider)

$40,000 – Projected average net worth of millennials in 2030 (Forbes)

$68 trillion – Amount of assets projected to transfer from baby boomers to Gen-Xers and millennials over the next 25 years. (Cerulli)

39% – Percentage of Americans surveyed that could not pay for a $1,000 surprise expense without some form of borrowing (Bankrate)

 Contact Us


Moisand Fitzgerald Tamayo, LLC is an Orlando, FL and Melbourne, FL based fee-only financial planner serving central Florida and clients across the country. Moisand Fitzgerald Tamayo, LLC specializes in providing objective financial planning, retirement planning, and investment management to help clients build, manage, grow, and protect their assets through all phases of one’s life and the many transitions in between.

If you have any questions or would like to discuss anything further, please give us a call or send us a note.

If you are not a client and wish to receive emails notifying you of new posts – no more than once per month – fill out the subscription information in the sidebar to the right.

For more frequent updates, follow us on FacebookLinkedIn, or Twitter.

 

Important Additional Information & Disclosures


Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Moisand Fitzgerald Tamayo, LLC-“MFT”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. 

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from MFT. 

Please remember that if you are a MFT client, it remains your responsibility to advise MFT, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. MFT is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. Tax advice is given only to clients and only when agreed to by MFT. A copy of the MFT’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request.

Please Note: MFT does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to MFT’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please Note: Limitations:  While MFT does NOT pay for recognition, awards, or publicity, neither rankings and/or recognition by unaffiliated rating services, publications, or other organizations, nor the achievement of any designation or certification, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if MFT is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers. No ranking or recognition should be construed as a current or past endorsement of MFT by any of its clients.  ANY QUESTIONS: MFT’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including providing the criteria used for any reflected ranking.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.  It should not be assumed that your MFT account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your MFT accounts; and, (3) a description of each comparative benchmark/index is available upon request.

 

About Dan Moisand

Dan Moisand is a fee-only financial advisor with Moisand Fitzgerald Tamayo, LLC. He is a regular contributor for multiple outlets, including Florida Today, MarketWatch, and The Wall Street Journal. His writing and financial advice have also been featured in Financial Planning, Investment Advisor, Wealth Manager/Advising Boomers, Forbes, Smart Money, and The New York Times, among other publications. He is the only two-time winner of the Journal of Financial Planning’s “Call for Papers” competition and has been named a top financial planner and advisor by multiple publications. Investment News named Dan one of the “twenty most influential men and women” in the history of financial planning. He currently serves on the Board of Directors for the CFP (Certified Financial Planner) Board.

WANT TO KNOW WHEN WE POST NEW MATERIAL?

As a Sanctuary From The Noise®, we only post information we believe timely and important to the long term financial success of our clients. Follow us to receive emails - no more than once a month - about new posts.

We keep your information private and make stopping our emails as easy as starting them.

Something went wrong. Please check your entries and try again.