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Repeal of Health Insurance Penalty

On December 20, 2019 President Trump signed two bills into law: the Taxpayer Certainty and Disaster Tax Relief Act of 2019, known as the “Disaster Act,” and the Further Consolidated Appropriations Act “FCAA”, 2020 (H.R. 1865, PL 116-94), known as the House amendment to the Senate amendment to H.R. 1865, includes the “SECURE Act” (H.R. 1994) (Setting Every Community Up for Retirement Enhancement). In general, the Disaster Act provides taxpayer and employers relief from disasters in 2018 to January 19, 2020. The FCAA and SECURE act contain retirement provisions, repeal of the “Cadillac Tax” and Health Insurance Penalty, extend PCORI fee and FMLA provisions.

What does all this mean to all of us?

The Disaster Relief provided for qualified disasters:

  • Exception to the 10% early retirement plan withdrawal penalty relief not to exceed $100,000

  • Employee retention credit of 40% of wages up to $6,000 per employee

  • Temporary suspension of charitable donation limitations

  • Eliminates 10% casualty loss floor for uncompensated losses

  • For 2018 the Earned Income Tax Credit and Child Tax Credit can be calculated using the immediate prior year earned income

  • Automatic 60 day filing extension

  • Excise tax on Private Foundation is modified to allow larger one-time donations

  • Additional low-income housing credit for California Disaster in 2017 and 2018

  • IRS employee training program

  • IRS to institute and enforce policies and procedures that will maintain the confidentiality of taxpayer information

  • IRS to improve taxpayer help line

  • Prohibit the IRS from targeting taxpayers from exercising their first amendment rights

The FCAA and SECURE Act provides the following relief:

  • Repeal the 2.3% Medical Device excise tax for all sales after December 31, 2019

  • Repeal of the health insurance provider’s fee after December 31, 2020

  • Repeal of the high cost employer-sponsored health coverage tax known as the “Cadillac tax” after December 31, 2019

  • Extend employer credit for Family Medical Leave Act until December

  • Extend employer credit for Family Medical Leave Act until December 31, 2020

  • Allow unrelated small employers to create open multiple employer retirement plans to be administered by a pooled plan provider

  • Repeal the disallowance of taxpayers over 70 ½ from making Traditional IRA contributions

  • Permit part-time employees who have worked 500 hours for 3 consecutive years to participate in employers 401K plan

  • Increase retirement required minimum distribution age to 72

As you can see, there is substantial assistance for US citizens with qualified disaster relief. I am sure for those living the disaster it has been a long time coming, but it is now finally here.

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