COVID-19 

31 March 2020 -

 

New York State Department of taxation and finance issued Notice N-20-2 confirming automatic personal tax filing and payment deadline extension for 2019 tax return filings through July 15, 2020. 

 

Refer to our blog for more detail on the Economic Impact Payment

28 March 2020 -

 

The CARES Act was just signed into law, including a number of individual income tax provisions. 

 

Here are some details on the Recovery Rebate Tax Credit:

 

Who qualifies for the 2020 Recovery Rebate Tax Credit? 

All adults who have a valid Social Security number authorizing work who are not claimed as a dependent on another's tax return (for 2020). One exception to this general rule is if a married couple files jointly and one of the spouses is a member of the Armed Forces, then only one of the spouses has to have a valid Social Security number that authorizes work.

 

All children, grandchildren, brothers, sisters, stepbrothers, stepsisters, nieces, and nephews who live with the adult as a member of their household in the US for more than one-half of the year and who are under age 17 with a valid Social Security number authorizing work (as of December 31, 2020) ("qualifying children")(no limit to the number of "qualifying children").

 

How Much Will I Receive?

Adults will receive $1,200 per qualifying individual ($2,400 for married filing jointly).

 

Adults who have "qualifying children" (as described above) will receive an additional $500 each, without limitation.

 

Adults who are claimed as a dependent on another's tax return will not receive a Recovery Rebate Tax Credit.

 

Even if you owe the IRS back tax liabilities your Recovery Rebate will not be reduced by any outstanding debts. The Recovery Rebate is a refundable tax credit against 2020 federal income taxes so it is not gross income/taxable income for 2020.

 

However, the 2020 recovery rebate amount is reduced by $5 for every $100 above the following adjusted gross income thresholds: $75,000 for single (or married filing separately) taxpayers, $150,000 for married filing jointly taxpayers, and $112,500 for head of household taxpayers. 

 

When Will I Receive My Recovery Rebate?

The federal government wants to push out these payments ASAP.  Therefore, they plan to deposit monies into bank accounts per 2019 (or 2018) automatic refund deposit authorizations. The Secretary of the Treasury has indicated that these payments would start in about three weeks. If they do not have this information from your tax filings they will mail you a paper check to your last known address. Needless to say, the manual check mailing distribution process will be slower than any automatic deposits for a number of obvious reasons including that the IRS is significantly underfunded, it is the middle of a busy tax season and many, if not all, of its face to face services have been shuttered due to COVID-19. The law does not permit US Treasury to send out any advance Recovery Rebates after December 31, 2020.

 

What Amount Will I Receive Since My 2020 Income and Other Information Is Not Yet Complete?

The federal government wants to push out these payments ASAP. Therefore, they are going to estimate your Recovery Rebate amount based upon your last tax return on record (e.g., 2019 or if not then 2018 (but not 2017 or 2016, etc.). Accordingly, your advance Recovery Rebate payment will be based upon the information from your 2019 (or 2018) tax return on file including how much your adjusted gross income was and how many "qualifying children" (as defined about) you claimed. 

 

Tax professionals agree we will need additional guidance from the US Treasury as to which children qualify based upon their age (for example a child born in 2003 or earlier will be 17 or older in 2020 and therefore will not qualify for the $500 Recovery Rebate, but as of 2019 (or 2018) they might be under age 17).

 

When you file your 2020 federal income tax return in 2021 you will reconcile the estimated Recovery Rebate received with your actual Recovery Rebate based upon your 2020 tax return information. If you should have received a higher Recovery Rebate because for example you had a child in 2020 or your 2020 adjusted gross income is lower than it was in 2019 (or 2018) (e.g., due to unemployment, but remember unemployment compensation is included in adjusted gross income), you will get any amount not previously received. If you received a greater Recovery Rebate based upon your 2019 (or 2018) information as compared to your 2020 actual information you do not have to pay any excess amount received back.

 

Adults who have not filed tax returns for 2018 or 2019, but who receive Social Security benefits will receive their Recovery Rebate based upon the information the Social Security Administration has on file. We are waiting for guidance from the US Treasury as to how this process will work.

 

19 March 2020 -

 

The IRS has officially confirmed that the federal filing and payment deadline of April 15 has been extended to July 15. This extension is granted automatically with no action required on the part of the taxpayer. However, certain states haven't extended their deadlines. 

 

Federal Filing and Payment Relief

 

The IRS has officially confirmed that the federal filing and payment deadline of April 15 has been extended to July 15. No interest and late payment penalties will be charged on payments made between April 15 and July 15. If your return can't be filed by July 15 you must file an extension request by July 15. The extension will shift the due date of the return to October 15. However, even if you extend to October 15, you must pay all 2019 taxes due by July 15. Interest and late payment penalties will be charged on payments made after July 15.

 

State Relief

 

California has announced that taxpayers may file and pay by July 15. This is automatic with no action required. Returns or extensions (to October 15) must be filed by July 15 for all taxpayers. Interest and late payment penalties will be charged on payments made after July 15.

 

Georgia has indicated they will likely follow federal relief, but nothing official has been released.

 

Illinois hasn't provided relief.

 

Massachusetts has indicated they will likely follow federal relief. However, nothing official has been released.

 

New Jersey has initiated draft legislation to allow NJ to follow federal relief. However, the maximum relief in the legislation is to June 30 rather than July 15.

 

New York has indicated they won't be providing any relief.


Other states have provided relief, plan to follow the IRS, or plan to provide no relief. The situation is fluid and will change.

 

 

2020 Estimated Tax Payments

 

The tax payment relief also applies to the 2020 tax year 1st and 2nd quarter estimated tax payment due April 15, 2020 and June 15, 2020. You must make your April 15, 2020 and June 15, 2020 payments by July 15. California has also moved the April 15, 2020 and June 15, 2020 payment due dates to July 15.

 

Foreign Bank Account Report

 

The due date of the FBAR remains October 15.

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