Tax Filing Information for Coronavirus Distributions

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The legislation included a provision that allowed qualified retirement plan participants and IRA account holders to take penalty-free early distributions totaling no more than $100,000 between January 1 and December 31, 2020. If you took advantage of this measure, here’s what you need to know for tax filing.

What Is a Coronavirus Distribution?

In order for a distribution to be qualified under the CARES Act, it must have been made to a qualifying individual before December 31, 2020. You qualify if you, your spouse, or dependents were diagnosed with the virus, or if you, your spouse, or someone who shares your principal residence experienced a pandemic-related financial setback as a result of:

  • A quarantine, furlough, layoff, or reduced work hours
  • An inability to work due to lack of child care
  • Owning a business forced to close or reduce hours
  • Reduced pay or self-employment income
  • A rescinded job offer or delayed start date for a job

The Three-Year Rules

A key provision in the Act allows the distribution(s) to be spread “ratably” over three years for purposes of calculating tax payments. In other words, the total can be reported in equal amounts on your 2020, 2021, and 2022 tax returns. For example, if you received a $15,000 distribution, you could report $5,000 in income for each of the three years. However, if you prefer, you can generally report the entire distribution in your 2020 tax filing.

Another provision allows you to repay all or a part of your coronavirus distribution to an eligible retirement plan within three years from the day after the date the distribution was received. Repayments will be treated as if you enacted a trustee-to-trustee transfer, and no federal income taxes will be owed. (A repayment to an IRA is not considered a rollover for purposes of the one-rollover-per-year rule.)

If you pay your income taxes prior to repaying the distribution, your repayment will reduce the amount of the distribution income you report in a subsequent year. Or instead, you may file an amended return, depending on your specific situation. Consider speaking with a tax professional before making any final decisions.

How to Report Distribution Income

If you received a coronavirus distribution(s) in 2020, you should use Form 8915-E, Qualified Disaster Retirement Plan Distributions and Repayments, to report the income as part of your 2020 federal income tax filing. You can also use this form to report any recontributed amounts.



The information in this report was prepared by Taiber Kosmala & Associates, LLC. Opinions represent TKS’ and IPIS’ opinion as of the date of this report and are for general information purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally. IPI does not undertake to advise you of any change in its opinions or the information contained in this report. The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor.

This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.

This communication is provided for informational purposes only and is not an offer, recommendation or solicitation to buy or sell any security or other investment. This communication does not constitute, nor should it be regarded as, investment research or a research report, a securities or investment recommendation, nor does it provide information reasonably sufficient upon which to base an investment decision. Additional analysis of your or your client’s specific parameters would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any client or portfolio and is not presented as suitable to any other particular client or portfolio.  Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.

Charitable Giving

Charitable giving can play an important role in many estate plans. Philanthropy cannot only give you great personal satisfaction, it can also give you a current income tax deduction, let you avoid capital gains tax, and reduce the amount of taxes your estate may owe when you die.

There are many ways to give to charity. You can make gifts during your lifetime or at your death. You can make gifts outright or use a trust. You can name a charity as a beneficiary in your will, or designate a charity as a beneficiary of your retirement plan or life insurance policy. Or, if your gift is substantial, you can establish a private foundation, community foundation, or donor-advised fund. Continue reading “Charitable Giving”

Key Numbers Projected for 2021

Key Numbers Projected for 2021

Even though the official numbers have not yet been published by the IRS, we wanted to send over the projected key tax figures for 2021. When the official numbers are released, we’ll share an update with an associated Email Alert.

Standard deduction
2020 Projected for 2021
Married filing jointly $24,800 $25,100
Head of household $18,650 $18,800
Single $12,400 $12,550
Married filing separately $12,400 $12,550
Standard deduction for dependent Greater of $1,100 or $350 + earned income Greater of $1,100 or $350 + earned income
Additional standard deduction for blind or aged (65 or older)
Single/Head of household $1,650 $1,700
All others $1,300 $1,350
Taxable income threshold for top 37% income tax bracket
2020 Projected for 2021
Married filing jointly $622,050 $628,300
Head of household $518,400 $523,600
Single $518,400 $523,600
Married filing separately $311,025 $314,150
Long-term capital gain 20% threshold (based on taxable income)
2020 Projected for 2021
Married filing jointly $496,600 $501,600
Head of household $469,050 $473,750
Single $441,450 $445,850
Married filing separately $248,300 $250,800
Alternative minimum tax (AMT)
2020 Projected for 2021
Maximum AMT exemption amount
Married filing jointly $113,400 $114,600
Single/Head of household $72,900 $73,600
Married filing separately $56,700 $57,300
Exemption phaseout threshold
Married filing jointly $1,036,800 $1,047,200
Single/Head of household $518,400 $523,600
Married filing separately $518,400 $523,600
26% on AMTI* up to amount, 28% on AMTI above amount
Married filing separately $98,950 $99,950
All others $197,900 $199,900

*Alternative minimum taxable income

Kiddie tax: Child’s unearned income
2020 Projected for 2021
Above this amount taxed using parents’ tax rates $2,200 $2,200
2020 Projected for 2021
Contribution limits
Traditional and Roth IRAs (combined) $6,000 ($7,000 if age 50 or older) $6,000 ($7,000 if age 50 or older)
Roth IRA income phaseout range (contributions)
Single/Head of household $124,000 to $139,000 $125,000 to $140,000
Married filing jointly $196,000 to $206,000 $198,000 to $208,000
Married filing separately $0 to $10,000 $0 to $10,000
Traditional IRA income phaseout range (deductibility)
1. Covered by an employer-sponsored plan and filing as:
Single/Head of household $65,000 to $75,000 $66,000 to $76,000
Married filing jointly $104,000 to $124,000 $105,000 to $125,000
2. Not covered by plan but filing joint return with covered spouse $196,000 to $206,000 $198,000 to $208,000
3. Married filing separately and either spouse is covered by plan $0 to $10,000 $0 to $10,000
Estate planning
2020 Projected for 2021
Top gift, estate, and generation-skipping transfer (GST) tax rate 40% 40%
Annual gift tax exclusion $15,000 $15,000
Noncitizen spouse annual gift tax exclusion $157,000 $159,000
Gift tax and estate tax applicable exclusion amount $11,580,0001 + DSUEA2 $11,700,0001 + DSUEA2
GST tax exemption $11,580,000 $11,700,000

1Basic exclusion amount

2Deceased spousal unused exclusion amount


Continue reading “Key Numbers Projected for 2021”

The SECURE Act will affect all of our retirement plans.

New Spending Package Includes Sweeping Retirement Plan Changes 

The $1.4 trillion spending package enacted on December 20, 2019, included the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which had overwhelmingly passed the House of Representatives in the spring of 2019, but then subsequently stalled in the Senate. The SECURE Act represents the most sweeping set of changes to retirement legislation in more than a decade. Continue reading “The SECURE Act will affect all of our retirement plans.”

What is the difference between the child tax credit and the child and dependent care tax credit?


These credits are quite different. First, the child tax credit. The purpose of this credit is simply to provide tax relief for parents, working or not, who have qualifying children under the age of 17. A qualifying child may be a dependent child, stepchild, adopted child, sibling, or stepsibling (or descendant of these individuals), or an eligible foster child. The child must be a U.S. citizen or resident and must live with you for over half the year. Continue reading “What is the difference between the child tax credit and the child and dependent care tax credit?”

Does my 16-year-old have to pay Social Security tax on her earnings?



Like most wage-earning employees, your 16-year-old will most likely have to pay Social Security tax on her earnings. Of course, every rule has its exceptions. In this case, there are three. She may be exempt from paying Social Security taxes if she (1) works in the family business, (2) works in domestic service, or (3) delivers newspapers. Continue reading “Does my 16-year-old have to pay Social Security tax on her earnings?”