In response to the COVID-19 pandemic, the IRS has extended the 2019 tax deadline to July 15 in 2020. Knowing when and what you have to file can save a lot of headaches at tax time, so we wanted to be sure you were aware of these updated dates as the time approaches. We realize that this filing extension along with other coronavirus-related legislation may create tax changes so we created this summary of the IRS deadline extension, along with some other "good to know" facts regarding how new rules may impact your 2019 and 2020 taxes.
2019 Federal Income Tax Filing Extension
- This federal extension is automatic for all taxpayers, regardless of the amount owed, including individuals, trusts and estates and those who pay self-employment tax.
- The delay pertains to any taxpayer with a federal tax filing due on or after April 1, 2020, but before July 15, 2020, including quarterly estimate tax payments.
- An extension to file by October 15, 2020, must be done using Form 4868 by July 15, 2020. Please note your payments are still due in full on July 15, 2020.
- While most states have followed suit in delaying their state tax deadlines, not all deadlines have been extended to July 15, 2020. Check here for a list of the state-by-state deadlines.
2019 IRA and HSA Contribution Extensions - With the above 2019 federal tax filing deadline extension came the same July 15, 2020, deadline extension for making 2019 contributions to your IRAs and HSAs:
- If you haven’t yet reached the $6,000 contribution limit (plus an additional $1,000 for those 50 or older) for IRAs for 2019, you have until July 15, 2020.
- If you haven’t yet reached the $3,500 individual or $7,000 family contribution limit (plus an additional $1,000 for those 55 or older) for HSAs for 2019, you have until July 15, 2020.
2020 Coronavirus-Related Distribution (CRD) Retirement Fund Withdrawals and Loans
- A CRD from a qualifying retirement fund made in 2020 will not be subject to the 10% penalty tax for early withdrawal.
- Taxes on the CRD can be spread out over a three-year time period instead of being due the year of withdrawal.
- Retirement account loans up to $100,000 that are funded between March 27 and September 27, 2020, allow you to delay payments on the loan for up to one year.
- Any outstanding retirement account loan you already have also has a delayed payment option of up to one year.
2020 Required Minimum Distributions (RMDs) - The SECURE Act pushed back the age for which retirees need to take RMDs from 70½ to 72. These new 2020 rules below are now in place as well:
- As stated in the CARES Act, all RMDs are waived for 2020, across the board.
- Any RMD deductions taken in 2020 can be rolled back into the plan within 60 days to avoid paying taxes on the amount.
2020 Deductions - While the standard deduction for 2020 rises to $24,800 for married filing jointly, $12,400 for single taxpayers and those married filing separately and $18,650 for heads of households claiming the standard deduction, the CARES Act also provides these giving incentives for 2020:
- Taxpayers who itemize deductions can temporarily increase the 60% adjusted gross income (AGI) limitation on cash contributions to deduct more charitable contributions made in 2020.
- Taxpayers who take the standard deduction have the option to take a $300 "above-the-line" deduction for cash contributions to charity.
2020 Stimulus Payments - The “Recovery Rebates” given out as part of CARES Act are considered an advance refundable tax credit on your 2020 taxes, meaning there are no taxes due on them. That money is all yours. Here are a few things to know:
- If the IRS overestimated your rebate amount based on the AGI of the tax year they used, you get to keep the overage. If they underestimated your rebate, you will be able to claim the additional amount owed to you when you file your 2020 taxes.
- If you claim a child on your 2020 tax return that wasn’t on your 2018 or 2019 tax returns, you will get a tax credit of $500 when you file next year. The person who received the $500 based on their 2018 or 2019 tax returns will not be required to pay it back.
- If you have a child in 2020, you will receive a $500 tax credit when you claim them when you file your 2020 taxes next year.
If you have any questions pertaining to the information above, please don't hesitate to reach out to us.
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