Confused About Taxes Amidst COVID-19? Check This.

Robert Joyce is a certified public accountant and financial planner in Yorktown Heights.

By Robert Joyce

Federal Tax Filing and Payment Deadline Extended

The U.S. Treasury Department and the Internal Revenue Service are providing special tax filing and payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns has been extended from April 15 to July 15, 2020. However, anyone who is owed a refund should file as quickly as possible. Filing electronically with direct deposit is the quickest way to get refunds. You do not have to be sick, or quarantined, or have any other impact from COVID-19 to qualify for this relief. If you need more time beyond July 15 to file your return, request an automatic extension of time to file. 

This filing and payment relief includes: 

The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their Federal income taxes on April 15, 2020, including all individual returns, trusts, and C-corporations. This relief is automatic, taxpayers do not need to file any additional forms or call the IRS to qualify.

First quarter estimated tax payments for tax year 2020 that are due on April 15, 2020. Second quarter 2020 estimated income tax payments are still due on June 15, 2020. 

Contributions to your IRA for 2019 is also extended to July 15, 2020.

10% early withdrawal penalties on deferred retirement accounts (i.e. IRA, 401K, etc.) are also extended to July 15, 2020 without any further penalty or interest.

Contributions to your HSA or Archer MSA for 2019 can be made at any time up to July 15, 2020.

Any taxpayers who have filing or payment due dates other than April 15 have not been granted relief at this time. Normal filing, payment, and deposit due dates continue to apply to both payroll and excise taxes. If you already filed your Federal income tax return and you owe money but have not yet made the payment, as long as you make the payment by July 15, 2020 you will not incur any interest or penalties.

Changes for IRA Withdrawals and Required Minimum Distributions

The Coronavirus Aid, Relief, and Economic Security (CARES) Act suspends the requirement for 2020 required minimum distributions (RMDs) for everyone. The suspension includes distributions for those who turned 70 ½ in 2019 and otherwise would have had to take a minimum distribution before April 1, 2020. Likewise, those who took a required distribution within the last 60 days can roll over their distribution to the same or a different IRA within 60 days of that distribution and not pay the income tax on the distribution, as long as the taxpayer did not make an IRA withdrawal within 365 days preceding the distribution.

The Act also provides for taxpayers, regardless of age, to take retirement plan distributions of up to $100,000 without the 10% early withdrawal penalty for those younger than 59 ½. What’s more, distributions taken in 2020 can be reported as income evenly over 2020, 2021, and 2022, or can be repaid within those three years to avoid income tax altogether. These provisions apply to individuals, defined as people who:

are diagnosed with the coronavirus; or

have a spouse or a dependent with the virus; or

experience financial hardship as a result of quarantine, furlough, lay-off, or reduced hours at work; or

are unable to work due to lack of childcare; or

own and operate a business that suffers closing or reduced hours.

The information in this article is as of 3/31/20 and is subject to change. All individuals and businesses should check with their tax preparer and financial advisors before making any financial decisions.

Robert Joyce is a certified public accountant and financial planner in Yorktown Heights. He can be reached at www.rfjoycecpa.com or 914-960-9285.

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