1 The filing tax delay - news and update Stimulus rebate payments - - PowerPoint PPT Presentation

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• The filing tax delay - news and update
• Stimulus rebate payments
• Unemployment
• Sick leave and Family leave details
• Other individual changes
• Coronavirus “disaster” loss reimbursements-

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• Retirement plan changes
• Executive Orders by Gavin Newsom

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• Filing due date automatically extended from April 15, 2020 to July 15, 2020
• Tax payments are also extended to July 15, 2020 without penalties and interest
• 2019 IRA/HSA/Retirement are due July 15, 2020
• 2019 Extensions to October 15th due July 15, 2020
• 2020 Q1 estimated tax payments are due July 15, 2020
• 2020 Q2 estimated tax payments UPDATE are due July 15, 2020 (Changed on April 9, 2020)

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• On March 13, 2020 a Federal Declared Disater was claimed related to the

COVID 19 pandemic

• President Trump signed into law on March 27, 2020 the Coronavirus Aid, Relief,

and Economic Security Act

• The CARES Act is a $2.2 trillion stimulus package to mitigate the impact of the

COVID 19 pandemic

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• What is your AGI (Adjusted Gross Income)?

○ Refer to your 2018 Individual Tax Filing ■ Line 7 is where the return reports your AGI ■ This amount is calculated after adjustments (retirement contributions, self employment taxes, student loan interest, to name a few) ■ But before your

• standard deduction ($12,000 single/$24,000 MFJ)
• Or, itemized deduction (mortgage interest, state and local tax payments (SALT),

donations, to name a few)

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• Individuals need a social security number, individuals with ITINs will not be eligibile
• CARES provides stimulus payments of $1,200 for each individual and $500 for each child

○ Dependents over age 16 do not receive a rebate ○ Only independent college students will receive a rebate

• Rebates will not offset existing debt such as payment plans, tax liens
• Single - Individuals with AGIs up to $75,000 a year are eligible for the full $1,200 payment

○ The payment amount is entirely phased out at an AGI of $99,000

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Single - Stimulus Rebate AGI AGI AMOUNT ABOVE $75,000 POTENTIAL REBATE LESS PHASE-OUT STIMULUS REBATE $75,000 $0 $1,200 $0 $1,200 $99,000 $24,000 $1,200 $1,200 $0 $24,000 / $100 = $240 X $5 = $1,200

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• MFJ - Couples with AGIs up to $150,000 a year are eligible for a $2,400 payment

○ The payment is reduced by $5 for every $100 in income above $150,000 ○ Payment amount is entirely phased out at an AGI of $198,000

• Married couples also will receive additionally $500 for every dependent child

under 17 ○ Payment phase out is at a slightly higher AGI

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MFJ - no children - Stimulus Rebate AGI AGI AMOUNT ABOVE $75,000 POTENTIAL REBATE LESS PHASE-OUT STIMULUS REBATE $150,000 $0 $2,400 $0 $2,400 $198,000 $24,000 $2,400 $2,400 $0 $24,000 / $100 = $240 X $5 = $1,200

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• HOH - With AGIs up to $112,500 a year are eligible for the full $1,200 payment

and an additional payment of $500 for each dependent ○ The payment is reduced by $5 for every $100 in income above $112,500 ○ Head of household taxpayers will also receive an additional $500 per qualified dependent under 17

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• With no eligible children, a head of household filer is phased out at AGI of

$137,000

• With one dependent a head of household filer is entirely phased out of the

payment at AGI of $146,400 The phaseout can be easily calculated using the Washington Post calculator

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• What needs to be done to get the Stimulus Rebate?

○ Nothing, the IRS will deposit the calculated amount directly into the individual’s bank account ○ IRS uses AGI and the bank information on the 2019 tax return. 2018 return if 2019 not filed

• Direct deposits should be received in about three weeks, according to Secretary Mnuchin maybe April 13th

payments will begin

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• No bank account on file? - The IRS will mail a check

○ Checks should start arriving in about six weeks ○ IRS Webpage to enter payment info https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here

• Stimulus rebate is a 2020 refundable tax credit

○ All reconciled on 2020 return

• Before you file the 2019 tax return, due July 15

○ Check to see if the 2019 AGI includes extraordinary income (sale of stock, sale of real estate, etc.) ○ This might push the client’s income over the phaseout threshold

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• Noticing Requirement

○ Within 15 days of distributing a rebate payment ○ IRS must mail a notice to the taxpayer's last known address stating how the payment was made ○ Including the payment amount, and a phone number to report any delivery problems ○ This should help with wrong bank info if IRS is using the 2018 info, but expect phone calls

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• Technically the stimulus rebate is a 2020 refundable tax credit

○ Many clients will have less income in 2020 than in 2019 ○ If payment was reduced by the 2019 AGI, they’ll receive a credit on their 2020 return ○ Received too much of an advanced payment? Taxpayer does not have to pay back the advance payment on their 2020 return ○ Taxpayer will not pay tax on the rebate payment

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• The IRS does not have your direct deposit information.

○ IRS is developing a web-based portal ○ Individuals provide their banking information to the IRS online ○ Payments will be received immediately as opposed to checks in the mail

• You had a baby in 2019 but have not filed your tax return

○ You will get your additional $500 rebate on your 2020 return

• Individuals receiving Social Security that don’t file a tax return

○ IRS will direct deposit the rebate using the SSA information.

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• Unemployment from the state ranges from 30-50% of the standard wage
• CARES provides unemployed individuals an extra $600 per week for up to four months, on top of state unemployment

benefits, to make up for 100% of lost wages

• CARES also extends unemployment insurance benefits for an additional 13 weeks
• Self-employed individuals may be entitled to unemployment benefits of $600 per week, plus half of the average state

unemployment benefit (if no state coverage) for 39 weeks

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• Small businesses with less than 50 employees might qualify

for an exemption

• Employer is reimbursed for the cost of the employee’s leave

through a credit

• To get immediate repayment for costs, the employer can

reduce payroll deposits through filing an IRS Form 7200

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• Requires certain employers to provide sick pay and family leave
• Credit repays the employer for the leave
• For period between April 1 to December 31, 2020
• Includes 2 weeks paid leave at employee’s regular rate

○ If unable to work because of quarantine, symptoms, medical care ○ Calculation of Pay $511/day in aggregate $5,110 if sick

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• 2 weeks paid leave at ⅔ of the employee’s regular rate

○ If needing to take care of a child who has no school or childcare

• There is an additional 10 weeks of paid family and medical leave at 2/3s of the employee’s regular rate

○ Employee had to have been employed for at least 30 days and unable to work because of the need to care for a child. Limited to $200/day for 10 weeks Limited to $12,000 in the aggregate per employee

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$300 charity deduction

• $300 deduction allowed in arriving at AGI only for those not itemizing

beginning in 2020

• Qualified charitable contribution

○ Made in cash ○ Allowable under §170 ○ Not for a donor advised fund

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Medical - HSAs and Flexible Spending Accounts Student Loans – Employer Payments §127 ○ CARES allows an employer to reimburse up to $5,250 of student loan interest and principal from Mar. 27, 2020 until Dec. 31, 2020 ■ No double dipping - The employee cannot deduct student loan interest paid by the employer ○ Loan payments delayed until Sep. 30, 2020

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What Tax Benefits Are Available for a Federally Declared Disaster?

• Any amount paid to or for the

○ Benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or ○ Funeral expenses incurred as a result of a qualified disaster ○

• EXAMPLE. Stanford Hospital reimbursement for medical workers

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• For calendar year 2020, the RMD rules are waived, including the first post-age-70 ½ (now 72) RMD

○ 80% of account owners take more than their RMD ○ If retiree turned 70 ½ in 2019 they still need to take their RMD by April 1, 2020

• Important for your client to know

○ Client may take any amount, just not required to take a minimum amount in 2020

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• Waiver of 10% Penalty for Coronavirus-related Distribution

○ Applies to a coronavirus-related distribution made to ■ a qualified Individual (or spouse or dependent) diagnosed with Coronavirus, ■

• r account owner having experienced adverse financial consequences due to Coronavirus
• Distribution is taxable - pay at any time over three years
• Can return the amount into the account within three years

○ Repayment is treated as a repayment made within 60 days of the distribution (like a rollover)

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• Pension Plan Loans

○ The limit on retirement plan loans during the 180-day period from March 27, 2020 is increased from $50,000 to $100,000 ○ Payments are delayed ○ Letters are coming from pension admin

• State and local taxes to July 15, 2020
• The filing and payment of Sales Taxes
• Banning evictions of renters who are affected by COVID 19 through May 31, 2020
• Waiving of the 1 week waiting period to receive unemployment benefits.

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The Information contained in the presentation is being provided with the understanding that it is not intended to be interpreted as special legal or tax advice. Individuals are encouraged to seek the guidance of their own personal and business legal and tax counsel.

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• IRS Coronavirus Page: https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments

○ IRS Filing and Payment Deadlines Q&A:

https://www.irs.gov/newsroom/tax-day-now-july-15-treasury-irs-extend-filing-deadline-and-federal-tax-payments-regardl ess-of-amount-owed

○ Economic Impact Payments (Stimulus):

https://www.irs.gov/coronavirus/economic-impact-payments

• California EDD Coronavirus Page: https://www.edd.ca.gov/about_edd/coronavirus-2019.htm

○ Filing an unemployment claim: https://www.edd.ca.gov/about_edd/online_services.htm#ForClaimants ○ Step by step process of claim filing: https://www.edd.ca.gov/about_edd/coronavirus-2019/unemployment-claims.htm

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• The filing tax delay - news and update
• Paycheck Protection Program Loans
• Sick leave and Family leave details
• Employer Retention Payroll Tax Credit rules
• Employee payroll Tax Delay Procedures
• Other business changes
• Executive Orders by Gavin Newsom

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