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MONEY SMART: Tax provisions you need to know for 2020

The pandemic has prompted new tax provisions for 2020. KENS 5 breaks down five changes that affect individuals and businesses.

SAN ANTONIO — The Coronavirus Aid, Relief, and Economic Security Act (CARES) includes tax provisions that will benefit individuals and businesses. A local financial advisor explains the changes that you may qualify for:

1. Charitable Contributions 

“With the tax changes a couple of years ago, many people used the standard deduction. A lot of their charitable contributions are not deductible. In 2020, even if you use the standard deduction, you can still deduct up to $300 of a gift to charity,” said Karl Eggerss, senior wealth advisor and partner of Covenant.

2. Student Loans

After March 27th of this year all the way through the end of the year, if an employer pays an employee’s student loans up to $5,250 dollars, it is not going to be counted as compensation to the employee. In the past it was. That is a nice little benefit for those employers that are paying for their employees students loans,” said Eggerss.

3. 401(k)

“If you were impacted by COVID financially, you could withdraw up to 100 thousand dollars out of your 401(k) and you don’t have to repay it for up to 3 years,” said Eggerss.

4. Individual Retirement Account (IRA)

“If you’re over the age of 72 and you are taking out required minimum distributions from your IRA, which is required each and every year by the IRS, you do not have to do that in 2020. And that also applies to people that have inherited an IRA as well,” explained Eggerss.

5. Business Interest

 “One other thing affecting business owners is business interest was deductible but only up to a certain amount. That has been increased this year, so even small business owners get some benefits directly related to their taxes and due to the 2020 changes,” said Eggerss. “The best thing to do is get with an advisor, get with your tax preparer, show them your situation.”

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