There’s no question that the 2020 tax season has been unlike any other with deadlines shifting, new policies being introduced, and emergency funding all unfolding over just a matter of weeks. We will continue to provide updates as frequently as necessary to keep you informed of the ever- changing landscape. Below are some of the most important pieces we’re tracking:
Tax Filing Dates
The IRS has delayed the filing of 2019 federal tax returns and payments with an original due date of April 1 or later until July 15, 2020. The due date for 2020 first and second quarter estimated federal tax payments has also been delayed until July 15, 2020.
Economic Impact Payments
As of April 13, the IRS started the several-week process of sending out stimulus payments, while launching an online application where you can check on the status of your payment: https://www.irs.gov/coronavirus/
get-my-payment. On this site, you can update bank account and mailing address information to speed up the process of receiving your payment. Note: Please be sure to access the official site at irs.gov to avoid being a victim of fraud.
Those not required to file a tax return in 2018 or 2019 can also access the online application to establish eligibility for a payment. Non-filer recipients of Social Security or Railroad Retirement Benefits do not need to use the tool to establish eligibility, but they can use the tool to check on the status of their payment.
College Refunds and 529 Plan Distributions
If you have received a refund of college tuition, housing, meal plans, or any other qualified educational expense which was originally paid out of a 529 plan account, you can re-contribute the funds back into the 529 plan by the latter of July 15, 2020, or 60 days following receipt of the refund. If you do not re-contribute the refunded amount, income taxes and penalties will be due on the earnings portion of the distribution.
Waiver of 2020 Required Minimum Distributions and Roth IRA Conversion Opportunities
Required retirement account distributions have been waived for 2020. The deadline to complete 60-day rollovers for distributions received after February 1, 2020, is extended to July 15, 2020.
The waiver of required distributions will create an opportunity for many to consider a Roth IRA conversion to optimize the use of tax brackets, while also taking advantage of current investment market conditions. A Roth IRA conversion will be taxed as ordinary income in the year of conversion, but all future earnings and growth on the converted amount will be tax free.
Payroll Protection Program Loan Updates
The Payroll Protection Program loan (PPP), offering forgivable loans to small businesses and the self-employed, has been immensely popular and ran out of funding on April 16, 2020. A bi-partisan group of Congressional and Administration leaders is working to finalize an agreement to add new funding. If it passes, it is important to act quickly as the loans are oftentimes offered on a first-come, first-served basis.
If you have any questions about any of the updates provided above or any program that is announced in the future, please reach out to us to schedule a conversation.
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NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.