Besides the change in filing date, there are three other vital areas came about as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act,
These changes impact retirement plan relief options, charitable donation incentives, and relief available for students making student loan payments.
Key Filing Dates Have ALL CHANGED.
Please make a note of the NEW Filing requirements.
|Tax Filing||Old Due Date||New Due Date|
|Form 1040 – Individual Income Tax Return||April 15||July 15|
|1st Quarter Individual Estimated Tax||April 15||July 15|
|2nd Quarter Individual Estimated Tax||June 15||July 15|
|2020 Texas Franchise Tax||May 15||July 15|
|Dallas County Business Personal Property Tax Renditions||April 15||May 15|
|Collin County Business Personal Property Tax Renditions||April 15||May 15|
The relief is automatic for all taxpayers. You do not have to file extensions or send documents for the new filing dates.
Retirement plan relief options
IRS has extended the following deadlines to July 15, 2020:
- Tax Return Filing Date (IRS Notice 2020-18)
- IRA and ROTH IRA contributions for 2019
- HSA Contributions
- Archer Medical Savings Accounts contributions
- Coverdell Education Savings Account contributions
Required Minimum Distributions (RMD) eliminated for 2020
- 2020 RMDs from company plans and IRAs
- 2020 RMDs for company plans, IRA and ROTH IRA beneficiaries
Coronavirus-Related Distributions (CRDs)
The 10% early distribution penalty is eliminated for any distributions from a company plan, or IRA made during 2020 to “virus-affected individuals.”
Are you and affected individuals?
Those diagnosed with the virus or disease
Those whose spouse or dependents are diagnosed with the virus disease
Those who experience adverse financial consequences as a result of the COVID-19 infection by:
- Being quarantined
- Being furlough, laid off, of having work hours reduced
- Being unable to work due to lack of childcare
- Closing / reducing hours of a business you owned or operated
Retirement Relief Available
The CARES Act removes the 10% penalty on up to $100,000 of 2020 distributions from IRAs and company plans (aggregated) for coronavirus-related distributions. The tax would be due cut could be spread evenly over three years, and the funds can be repaid over the three years. Affected individuals who are over the age of 59 ½ (not subject to the 10% penalty) can still take advantage of the three-year income tax deferral and payback.
Plan Loan Relief
For affected individuals. The maximum amount of plan loans increased from $50,000 to the lesser of $100,000 (reduced by other outstanding loans) or 100% of the account balance.
This relief applies to loans taken 180 days from March 27, 2020, and any loan payment typically due between the date of enactment and December 31, 2020, can be suspended for one year.
IRAs do not allow for loans
Relief available for students
There are three components under the CARES Act:
Suspended Federal student loan payments
The interest rate is 0% on federal student loans.
A student in default is no longer subject to IRS garnishment.
You can read more about the grace period and actions to take for relief, such as refunds from recent payments already made.
Planning Tip: If you can continue to make your student loan payments or increase them (use your stimulus check), 100% goes to principle, reducing your loan and the interest in the future.
Charitable donation incentives
New above-the-line charitable deduction. For the tax year 2020, up to $300 in qualified philanthropic contributions may be claimed in computing adjusted gross income (AGI). It applies to tax years beginning after December 31, 2019.
Planning Tip: Taxpayers who itemize deductions will not get the additional benefit of this $300 above-the-line deduction. All qualified charitable contributions made by itemizing individuals will continue on Schedule A of Form 1040.
Relaxation of the 60% AGI limit for cash contributions. The percentage limitation for cash charitable contributions made by individuals is temporarily increased.
Planning Tip: Carryovers of contributions from the prior year are not eligible. Only contributions made in the calendar year 2020 will qualify.
Got something on your mind or have a question?
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Michael Tannery CPA CDFA® AIF® ● CEO
Registered Principal | Tannery & Company