COVID-19 Relief (CARES Act)
I just completed a webinar on the COVID-19 Relief (CARES Act) that was just signed March 27. While we’re waiting on some details and clarification, here it is in a nutshell:
Due dates to file and pay your tax returns have been extended from April 15 to July 15 (That doesn’t apply to Partnership and S Corp returns, as their due dates were March 15). If you need additional time to file, you can file an extension by July 15 to give you until October 15, 2020. But the deadline to PAY your taxes is still July 15.
The due date for paying your first estimated quarterly income tax has been extended to July 15. BUT, the 2nd estimated payment is still June 15. The 3rd payment is still due Sept 15, as is the 4th quarter payment due on Jan 15, 2021.
If you already set up your tax due payment for April 15, you can cancel it and have it pay on July 15. You can go to http://www.irs.gov and cancel it online. NOTE: Not all states are conforming to Items #1, 2 and 3! Please check with your individual state.
Employers with less than 500 employees can receive a 100% payroll tax credit for providing emergency sick paid leave (up to 2 weeks) or emergency family and medical leave (up to 10 weeks) to employees impacted by COVID-19 with qualifying reasons.
Small businesses can get low interest loans of up to $2 million.
Taxpayers on installment agreements, in debt collections or applying for an Offer in Compromise will see some relief, as all of those have been suspended to July 2020, including private debt collection and automatic liens. Check with your tax accountant to see if you’re in that group.
Individuals laid off or with reduced hours can apply for unemployment and also receive additional federal unemployment benefits of an additional $600 for up to 39 weeks.
If you have a retirement account (or IRA) and need funds for COVID-related hardships, you can withdraw up to $100K, without incurring the 10% penalty. While the distribution is taxable, you can elect to pay the tax over a 3 year period, OR you can pay back the IRA (like a direct rollover) and avoid all taxes. NOTE: Again, these benefits apply to the IRS and may not apply to your individual state.
The Required Minimum Distribution (RMD) has been waived for 2020. Also, if you want to contribute to your IRA or HSA for 2019 taxes, the deadline has been extended from APril 15 to July 15.
For 2020, charitable contributions of up to $300 will receive an ABOVE-LINE deduction, meaning it reduces your adjusted gross income and is not an itemized deduction.
The stimulus payments of $1,200 (single), $2,400 (married) and $500 (per child) are actually tax credits, so they are NOT taxable. The phaseout for Singles begins at $75K and ends at $99K; for head of household, $112.5K – $146.5K; married, $150K – $198K.
For businesses, up to 50% of qualified payroll can have their payroll taxes deferred- 1/2 to Dec 2021, and the other 1/2 to Dec 2022.
Net Operating Losses can now be carried back for 2018, 2019 and 2020.
Student loan payments suspended through Sept 30, 2020. If you are current, you have to request the extension. If you are delinquent, it will automatically be extended.
Can defer your mortgage payments up to 120 days, but contact your mortgage company, as it’s not automatic.
Federally-backed loans- can request a forbearance for up to 180 days.
No new foreclosures for delinquent taxpayers; no new evictions. Eviction limits seem to be state-by-state at this time, so always check with your local representatives.
That’s it for now– I’ll keep you posted as we get more info and clarification!
