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Individual Updates

As COVID-19 continues to disrupt lives, you’ve no doubt heard that the federal government has taken action to ease the burden on taxpayers with an extension of the normal April 15, 2020 filing and payment deadline. The new deadline is July 15, 2020. However, the details can vary according to whether you’re filing as an individual, corporation (and type of corporation), trust or estate.

This letter should cover the highlights, but as always, your situation may offer unique challenges. For this, don’t hesitate to call our office. We’re still available by phone, and our website now features a COVID-19 Response page that will be updated regularly.


INDIVIDUALS

Were you planning to file for an extension on the April 15, 2020 date? Since the filing deadline for that extension is automatically pushed to July 15, 2020, there’s no need to file for an extension.

Refunds for the 2019 tax year are not affected by this change, but the IRS urges taxpayers owed a refund to file as quickly as possible.

Tax payments due are automatically extended to July 15, 2020. This applies to all individual returns.

Estimated tax payment deadlines become a bit more complicated. The initial first quarter tax payment that would have been due on April 15, 2020 is now due on July 15, 2020. However, the second quarter tax payment due on June 15, 2020 will still need to be paid by that date. Please make a note of this.

Tax Rebate Checks
Much anticipated, the Treasury will issue one-time (at least for now) tax rebate checks of $1,200 per individual and $500 per child, for those who have filed tax returns. They will be based on the adjusted gross income on your 2019 individual income tax return if filed, 2018 if not. The full rebate amount is available for those with adjusted gross income (AGI) at or below $75,000 (single), $112,500 (head of house), and $150,000 (joint).

NOTE: If you use direct deposit for your filing method, you will receive your rebate via direct deposit.


Treasury, IRS launch new tool to help non-filers register for Economic Impact Payments

To help millions of people, the Treasury Department and the Internal Revenue Service today launched a new web tool allowing quick registration for Economic Impact Payments for those who don’t normally file a tax return.


TRUSTS AND ESTATES

The tax relief postponement applies to payments due from trust and estates (Form 1041), becoming due on July 15, 2020. However, the normal filing and due dates for estate and gift taxes (Forms 706 and 709) are still April 15, 2020.

SELF EMPLOYMENT

The tax relief extension applies to all self-employed individuals and is July 15, 2020.

HSA or Archer MSA

These are also extended to July 15, 2020.


IRA CONTRIBUTIONS and DISTRIBUTIONS

The date that you must contribute to your IRA has also been pushed forward to July 15, 2020, in concert with the date for filing 2019 individual returns. RMD’s (Required Minimum Distributions) do not have to be made in 2020.

Eases Restrictions on Retirement Account Use:
It suspends the 10% penalty on 401k and IRA early withdrawals when they are coronavirus-related and taken in 2020. The cap on these distributions are $100,000 and is retroactive to January 1. This will allow access to cash flow without being harshly penalized.


STATE and OTHER FEDERAL TAX PAYMENTS

The relief outlined in the IRS notice only applies to federal income tax payments that would have been due on April 15, 2020. It does not apply to state tax payments, deposits or payments of any other type of federal tax such as excise taxes. It remains to be seen what state and local tax relief may be in the offing.


FINAL CONSIDERATIONS

Individual taxpayers do not have to do anything to qualify for the tax relief extension, or file any additional forms, or call the IRS to be eligible.

You can read the official IRS guidance here, and the IRS has also addressed additional questions on its website.

Refer to our website and click on “Covid-19 Response” for the latest information and links to more details. This section will be continuously updated as changing conditions warrant.

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