The World is Changing
and so is the IRS.
April 10, 2020
First and of course most important, I hope you are all healthy, and safe.
These are unusual times.
Less than two weeks ago, the Treasury announced a NATIONWIDE postponement of most tax returns and payments due April 15, 2020 until July 15, 2020. Left in a state of confusion were second quarter estimates that were due June 15, before the returns were due. Gift and estate tax returns among others were still due April 15.
A short time ago, IRS issued Notice 2020-23 which has finally granted the relief my professional organization, the AICPA, has been arguing in favor of for the past 10 days.
THE NEWEST ITEMS:
Second quarter estimates due June 15, 2020 are now due July 15, 2020 without penalty or interest. However, if your return has already been filed, it is still possible the 2nd quarter estimate will be withdrawn (if selected) on June 15. There is a phone number to call, 888-353-4537., if you want to make any changes to automatic withdrawals.
ExPats who had the automatic extension to June 15 can now file up until July 15 with no penalty or interest (previously, ExPats could file on June 15 without penalty but did have to pay interest, which is now waived).
Have you forgotten to file your 2016 return and were owed money? The original due date of April 15 to file an original or amended return is now extended until July 15.
Benefitting IRS and aggravating affected taxpayers is the fact that taxpayers who are under audit, are in the middle of any correspondence, may now have to wait an additional 30 days before you hear back from IRS. Why? Because many of their offices, including the Practitioners’ Priority Service (which CPAs like me call when we need to talk to IRS) and the Central Authorization Files units (where we send the IRS Power of Attorney forms so those of us authorized are registered to speak on your behalf with IRS) have both been shut down among other departments.
There are other items but not affecting many of my clients. And that’s who I focus on.
FROM THE PRIOR NOTICE, HERE TO REMIND YOU ARE SOME OF THE ITEMS THAT HAVE BEEN AFFECTED:
All income tax returns and payments due April 15 are now due July 15.
IRA and SEP contributions for 2019 can now be made by July 15. The extra time is because the due date is tied to the due date of the returns as set by the Treasury. It includes HSAs and MSAs as well.
No Required Minimum Distributions must be taken for 2020. Any already taken, can be redeposited back into your account as long as it includes any accrued income.
Loans from qualified plans (i.e., 401ks) can now be taken up to $100,000.
Withdrawals from retirement plans prior to age 59½ will not be subject to the 10% premature distribution penalty.
Suspension of installment plan payments until after July 15.
AND REGARDING THOSE STIMULUS CHECKS:
There certainly has been a lot of confusion about them.
Payments will be directly credited to those Taxpayers that have allowed either direct debit or direct credit from a personal bank account on a tax return in the past. Rumor has it that IRS will be opening a web portal to allow Taxpayers that have not given IRS their bank information in the past the ability to enter their bank account info. Keep reading the news to see if that ever comes to fruition. Of course, only if qualified.
Anyone that receives Social Security, Railroad Retirement, or any other Federal government payments electronically credited will receive the stimulus payments they are entitled to via the same method, currently without the need to file a $-0- tax return. That too could change.
The stimulus payments not electronically credited will be sent by paper check and could take MONTHS (yes, you read that right) to go out to Taxpayers. The government/IRS apparently has very old computers (which is VERY true) and printers and can only print so many per week. So, if you have the opportunity to provide your bank account information, it will be a good idea to do so.
If you owe for back taxes, installment plans, etc., these payments will not be offset by any claims. Right now, the only thing that could cause a stimulus payment to de diverted is child support in arrears.
What is the stimulus payment? In effect, it is an advance refund against your 2020 Taxes. But don’t get nervous. You will not have to repay it unless your income was up beyond the thresholds. I imagine there will be a calculation to determine how much you were entitled to receive based on your 2020 return, and how much you did receive. For most people, the amounts will be one and the same.
But if you had, i.e., substantial income in 2018 or 2019 which meant you did not receive an initial stimulus payment, and then your 2020 income is much less … you will receive the added stimulus payment based on your 2020 return.
Your income went up in 2020? I imagine the reverse would hold true. But I have not yet read anything on that. Doesn’t mean it is not available. There have been a gazillion articles written and this is still tax season, so I have not been able to read all of them yet.
There are other aspects of the stimulus payment and this is only meant to be an overview, and not a major dissertation on them.
There will be more stimulus payments, particularly trying to benefit low income people.
There will be more SBA programs for smaller businesses.
John was the Walrus.
I will try to keep you informed as I learn things that I believe are important for you to know.
Questions … e-mail me at firstname.lastname@example.org.