COVID-19 and Taxes

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COVID-19 and Taxes

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]UPDATED AS OF 4/2/2020 10:00PM MST

I’ll be updating this as often as I can and back-linking to relevant sources for accuracy. There is a TON of false information floating around.[/vc_column_text][vc_separator][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

Table of Contents

Federal Tax News

Stimulus Packages

Arizona Tax News 

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Federal Tax News

Payment deadline has been extended from 4/15/2020 to 7/15/2020 without penalties and interest.

This means that if you owe federal taxes for 2019, they will let you pay as late as 7/15/2020 without any interest or penalties added.

 

Filing due date extended to 7/15/2020

This means you don’t have to file an extension or your return until 7/15/2020.

If you expect a refund? File NOW! Who knows how slow the government will be in issuing refunds with all the chaos going on.

 

Estimated Q1 taxes also pushed

Per IRS, these payments are also extended by 90 days so you can hold onto those payments a little while longer.  NOTE: they did not extend the due date for Q2 which is due on June 15th.

 

WHAT TO DO:

If you have a refund, file ASAP and get those funds. Who knows how long it could take.

If you can’t pay your balance, adjust your budget and make plans to pay by 7/15/2020.

 

HSA and IRA contribution deadline pushed to 7/15/2020

Per IRS, the deadline to make a timely payment is done by the due date of the return – they’ve confirmed that it applies to the change of due date too.

 

Retirement Distributions

You can withdraw up to $100k this year without the usual 10% penalty, if its due to COVID-19.

You can pay the taxes on the distribution up to 3 years (1/3 per year).  You can also payback distributions over 3 years similar to the 60 day repayment rule.

Required Minimum Distributions have been suspended for 2020.  No one will have to take a required minimum distribution.

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Stimulus Packages

The $2 trillion relief package has been passed.

It appears that the income limits are $75k-$99k per taxpayer (double if married filing jointly) to receive $1,200/taxpayer. Income is based on 2018 or 2019 if filed. In addition, $500 for each child under 17 in 2020.

See this article for most recent FAQs.

 

Paid Sick Leave Act

Passed by President Trump on March 18, 2020.

 

Paid Sick Leave for Workers

For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.

 

Complete Coverage

Employers receive 100% reimbursement for paid leave pursuant to the Act.

Health insurance costs are also included in the credit.

Employers face no payroll tax liability.

Self-employed individuals receive an equivalent credit.

 

What does this mean for self-employed people???

You are to receive an equal credit that is applied against income tax. However, we aren’t sure if it is for the 2020 tax year or how it will be implemented for immediate relief. We are still waiting on guidance from the IRS. Sit tight.[/vc_column_text][vc_separator][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

Arizona Tax News

Payment deadline?

Arizona will follow Federal and the due date for 2019 returns and payments are pushed to 7/15/2020.

2020 Quarterly estimates have NOT been extended. Your 1st Quarter Payment is still due 4/15/2020.

WHAT TO DO:

If you have a refund file ASAP

If you owe and plan to pay later, make sure you file the return OR an extension.

Still pay your Q1 2020 estimate due 4/15.

Unemployment

The stimulus plan now allows many more people to qualify for benefits than before. If you are unemployed, partly unemployed or unable to work due to Covid-19 then you are likely to qualify.

Under the plan eligible workers receive an extra $600 per week on top of their regular benefits.

The amount of benefits depends on your employment history.

Arizona DES: COVID-19 and Unemployment Insurance Benefits

Arizona DES: Unemployment Insurance Extension under CARES Act
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