Monday, March 30, 2020
New York State has now officially extended the filing and payment deadline for state tax returns from April 15 to July 15. Click here for notice N-20-2.
“2019 returns due on April 15, 2020, and related payments of tax or installments of tax, including installments of estimated taxes for the 2020 tax year, will not be subject to any failure to file, failure to pay, late payment, or underpayment penalties, or interest if filed and paid by July 15, 2020.”
No word from New Jersey yet. No clue why Murphy is waiting – and no reason for him not to extend the NJ filing and payment date.
Saturday, March 28, 2020
Based on what I have read, in addition to the $1,200 per taxpayer, plus $500 per dependent child under age 17, stimulus payment the economic relief package that Trump has signed into law includes the following items of interest –
(1) There is an automatic suspension through September 30, 2020 for payments of any student loan held by the federal government – a “direct loan”. Interest will not accrue on the loan during the suspension period.
(2) For calendar year 2020 nobody will be required to take an RMD (required minimum distribution) from any individual retirement accounts (IRA) or workplace retirement savings plans (401k). This does not affect “traditional” pensions. This way the plan will not be forced to sell investments at a loss resulting from the virus-inspired market drop to generate cash to distribute.
(3) You can make a premature withdrawal of up to $100,000 from an IRA or workplace retirement plan for virus-related purposes without having to pay the 10% penalty. The federal income tax on a qualified withdrawal is spread over 3 years. You can return all or part of the withdrawal before 3 years from the date you took the withdrawal. You qualify for the penalty exemption and special tax treatment if you, your spouse or a dependent tested positive for the virus or you experienced negative economic consequences related to the pandemic – for example from being quarantined, furloughed, laid off, having reduced hours, or being unable to work due to a lack of child care.
(4) Taxpayers who do not itemize can deduct as an adjustment to income (deduction from gross income) up to $300 in charitable contributions on their 2020 Form 1040 (or 1040-SR). This appears not to be limited to tax year 2020.
Thursday, March 26, 2020
Wednesday, March 25, 2020
The IRS has released a “Filing and Payment Deadlines Questions and Answers” page at irs.gov.
Here are some highlights –
* The postponement of the filing and paying deadline to July 15, 2020 applies to Form 1040, 1040-SR, 1041, and 1120.
* The relief “applies only to Federal income tax returns for the 2019 taxable year.” It does not extend the April 15, 2020 deadline for filing an amended 2016 Form 1040.
* No relief has been provided for filing or payment dates other than April 15, 2020. The filing of Federal tax returns due March 16, 2020, such as Form 1065 and Form 1120-S, has not been postponed.
* “Normal filing, payment, and deposit due dates continue to apply to both payroll and excise taxes.”
*“Normal filing and payment due dates continue to apply to estate and gift taxes.”
As for IRA contributions –
* “Contributions can be made to your IRA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020.”
Saturday, March 21, 2020
The Internal Revenue Service has officially announced that the deadline for filing the 2019 Form 1040 has been moved from April 15, 2020 to July 15, 2020.
This means it is not necessary to either mail a finished return or submit a Form 4868 – request for automatic extension – to the IRS by April 15th.
Previously the Service announced that it would not charge interest and penalties for payments made between April 15 and July 15, 2020 – but that the actual filing date was not extended. The Service has now announced, via Notice 2020-18 –
“ . . .the due date for filing Federal income tax returns and making Federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. “
This automatic extension applies to tax returns and payments due April 15, 2020 for individuals, trusts, estates, partnerships, and corporations. It also applies to “Federal estimated income tax payments . . . due on April 15, 2020.”
I personally will continue to work to prepare the returns I have received as soon as possible. While, no longer having the original April 15th deadline hanging over my head, I may work a bit more leisurely, I do not intend to make any change to my daily tax season schedule . I certainly do not intend to stretch my season out till July 15th.
Clients with refunds will want their returns done promptly so they can get their money. And those who may owe will want to know how much, even though payment does not need to me made until July.
The only change is that I will not stop work on April 14th as planned (actually April 13th, as the 14th is usually spent writing up the extensions), and will postpone my annual recuperative trip to the Jersey shore for a week or two, assuming the hotel will be open.
It is my intention that all returns for which I will receive all the necessary information in a timely fashion will be finished before the end of April. As of this writing I have actually either completed, received a package from, or heard from just about all of my 1040 clients.
What this postponement of the filing deadline means is that I will probably have only 1 or 2 actual GDEs (the E is for “extension”) this year – as 1 client waits for K-1s from multiple limited partnership investments to arrive before filing and another is just a procrastinator.
Wednesday, March 18, 2020
FYI, here is the text of a memo I am including in the finished return package of all 1040 clients who have a balance due to Uncle Sam -
"It appears that the federal government will not charge penalty or interest on late payments of 2019 federal income tax due for 90 days after the April 15, 2020 filing deadline.
You will still have to file the Form 1040 by the April 15 deadline. But you won’t have to pay any tax due for 90 additional days. During that time, you will not be subject to interest or penalty payments.
If the enclosed federal tax return has a balance due, and
(1) you are paying the tax with the return - mail the signed return with the Form 1040-V payment coupon and your check in the envelope provided before April 15, 2020.
(2) you are not paying the tax due with the return - mail the signed return to Internal Revenue Service, Kansas City MO 64999-0002 before April 15, 2020. Mail the check for the full amount due and the Form 1040-V payment coupon in the envelope provided before July 15th (by July 1st to be safe).
This payment delay is for federal returns only. This is not for state tax returns. If you have a balance due to Phil or Andy file the return with full payment before April 15, 2020."