Question

Which of the following is TRUE regarding changes to 2020 tax law for individuals?

Employers may pay up to $5,250 toward an employee's student loan principal and interest. This amount may be excluded from the employee's taxable income.

Individuals may claim up to $500 of charitable contributions as an above-the-line deduction.

Extended unemployment benefits are not taxable income.

A high-deductible health plan (HDHP) may only pay for remote medical care for COVID-19-related treatment after the plan deductible is met.

Answer 1

Based on the questions and options available, the correct answer is Option A - Employers may pay up to $5,250 toward an employee's student loan principal and interest. This amount may be excluded from the employee's taxable income. Per IRS, the employers will now be able to contribute upto $5,250 towards an employee's student loans tax free throughout 2020. Historically they were treated as wages, but until the end of 2020, these payments are excluded from income and payroll taxes.

Option B is incorrect. Individuals can claim only upto $300 as an above the line deduction with respect to the charitable contributions made.

Option C is incorrect. This statement is not true because extended employment benefits are included as part of the the taxable income.

Option D is incorrect because IRS relaxed the norms regarding the high deductible health plans. They can now cover the costs of testing and treating the Covd-19. before the patients spend upto their plan's deductible.