Mike’s Tax Bites – Tax Law Changes


There have been many changes to the tax laws in the last several months and with the coming tax season, I thought I would spend the next several blogs highlighting some of those changes. In particular, some tax opportunities to save you money on your 2020 tax return.

Probably the biggest news-making changes were the extensions to the Cares Act. The new economic relief package that was recently passed, formally, the Consolidated Appropriations Act, which expanded the Coronavirus Aid Relief and Economic Security Act, known as the Cares Act; provides some new tax breaks, but also extends some Cares Act benefits. For small businesses, the new law extends the Paycheck Protection Program known as the PPP loan. These second draw loans can now be forgiven without federal income tax consequences and in large part extends the old PPP program with a slight variation requiring a quarter over quarter reduction in gross receipts.

For individuals, there are new economic stimulus payments with a maximum of $600 for individual and qualified children under age 17. These payments phase out for higher-income taxpayers and are based on 2019 tax return information. The charitable donation aspect of the Cares Act was also extended allowing a maximum deduction for joint filers of $600 without the need to itemize expenses.

For individuals who have medical expenses, the new threshold for deducting these are 7.5% of a taxpayer’s adjusted gross income, down from 10%. While the threshold level is still unfortunate, it is better now than the old 10% threshold and may provide relief if you have large medical expenditures.

Next week, I will highlight more potential opportunities in the new Cares Act extender legislation as well as some older tried and true donations that could save you money.