The IRS has extended the tax filing deadline from April 15 to July 15, 2020. If you are owed a refund, please continue to file as quickly as possible.
The extension applies to all individual returns, trusts and corporations, and includes:
- Tax payments for 2019
- Estimated tax payments for 2020 tax year due on April 15
- Retirement plan contributions also extended for SEP, IRA, Roth IRA, etc.
Most states have also extended their filing deadlines (PA has extended) but please consult your local state tax authority to confirm your status.
CARES Act is the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act that was signed into law last Friday. Here is what you need to know:
- One-time tax rebate checks up to $1,200 per taxpayer ($2,400 for those who file jointly) PLUS an additional $500 per child. For those with annual incomes over $75,000 ($150,000 for joint returns) the rebate is gradually reduced to $0.
- Expansion of unemployment benefits to include those who would ordinarily not qualify (independent contractors, online platform workers, contractors, on-call workers and other self-employed individuals). It also increases the assistance by as much as $600 a week for certain employees for up to four months.
- Waives the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts for taxpayers facing virus-related challenges. The income tax due on the distribution is spread over three years. The taxpayer could also return all or a portion back to the retirement account within those three years and it will not count toward annual contribution limits.
- Waives required minimum distribution rulesfor most retirement plans in calendar year 2020.
- Employee Retention Credit incentivizes businesses to keep workers on payroll. The credit is equal to 50% of qualified wages paid from March 13, 2020 through December 31, 2020 for employers whose operations were fully or partially suspended due to COVID-19 shutdown orders. For more information please see the IRS website https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act
- The Paycheck Protection Program provides $350 billion in funding for qualifying businesses and sole proprietorships in the form of forgivable loans up to 2.5 times their average monthly payroll to use toward payroll, rent, and utility costs. If used for these expenses, the loan converts to a federal tax-free grant by year end. Please find the application here https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
We encourage you to contact your Financial Advisor, CPA or Attorney for individual guidance.