The Consolidated Appropriations Act (“CAA”) provided coronavirus relief as well as other tax related extensions that will affect your clients. Here are some highlights that relate to individuals.

• Stimulus checks are back. The amount is $600 per taxpayer and $1,200 for married persons filing jointly along with $600 for each qualifying child. Income limits vary upon marital status.
• Teachers and instructors who teach grades K-12 are allowed a $250/$500 (Single/MFJ) above the line deduction to allow for the purchase of personal protection equipment and disinfectant.
• The above the line deduction for $300 of charitable gifts is extended into 2021.
• There are two provisions related to your client’s health care expenses.
  • First, taxpayers that itemize their deduction may continue to expense unreimbursed health care expenses that exceed 7.5% of adjusted gross income.
  • Additionally, taxpayers that use a flexible spending account (FSA) as part of a cafeteria plan to reimburse medical care expenses may continue to carry over unused amounts in the FSA.
  • For taxpayers that have deducted tuition and related expenses as an above-the-line deduction should be aware that this is no longer an eligible deduction in 2021.

For more information, review the press release at IRS.com.
 

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