COVID-19 Resources for Taxpayers

COVID-19 Tax and Business-related Resources for Clients

The coronavirus pandemic has brought about many tax and business-related changes to assist individual taxpayers and businesses during this difficult time. We understand that the sheer amount of information may be overwhelming and difficult to navigate. As such, we’ve summarized below, a list of tax and business-related resources available to assist our clients during the coronavirus pandemic.

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Don’t hesitate to call the office if you have any questions or need additional information. Our monthly newsletter contains important tax information for our clients as well.

Recovery Checks             Check on your Status-IRS.gov

Recovery check distribution amounts—Single taxpayers will receive $1,200 and joint taxpayers will receive $2,400. There is an additional $500 for each qualifying child.

The recovery check is considered a credit for 2020, but paid in advance.

The amount is reduced (but not below zero) by 5% of each dollar a person’s adjusted gross income (AGI) exceeds. Consider the following:

  • Married filing joint: $150,000 (AGI over $198,000 does not qualify)
  • Head of household: $112,500 (AGI over $146,500 does not qualify)
  • Single: $75,000 (AGI over $99,000 does not qualify)

Consider the following example:

  • A married couple with no children has an AGI of $190,000.
  • $190,000 is $40,000 above the $150,000 amount shown above.
  • The couple’s check is reduced by 5% of $40,000, which is $2000.
  • Therefore, they would receive a check for $400. (i.e., $2400 - $2000 = $400)

Other key details for recovery check eligibility include:

  • Nonresident aliens are not eligible for the rebate.
  • If a taxpayer has an outstanding debt (which the IRS would typically offset a refund by paying that debt), recovery dollars will not be used to offset that debt.
  • Amount will be direct deposited into the account on the last filed return. Every taxpayer will receive a letter indicating their recovery check was dispersed. If the letter is not received, there will be a specific phone number to call to have the check re-issued.
  • AGI will be accessed from 2019 returns if filed at the time of determination. Otherwise, 2018 returns will be used. Taxpayers who have not filed a return will not receive a check unless they did not file because they only have SSA-1099 or RRB-1099 (social security). The Treasury Department will review those forms for 2019 and issue the appropriate amount via check.

Retirement Distributions

Ability to withdraw up to $100,000 retirement in 2020 for COVID-19-related purposes without 10% penalty—The distribution is taxable over a 3-year period unless electing to pay it back within 3 years. This essentially equates to a loan unless it is not paid back within the 3-year timeframe. This rule applies to individuals:

  • Diagnosed with COVID-19
  • Who have family (spouse or dependent) who have been diagnosed with COVID-19
  • Who have adverse financial consequences in relation to COVID-19
  • Who include the distribution in taxable income (unless they elect the 3-year payback)

Waived required minimum distributions (RMD) from individual retirement accounts—The required minimum distribution for 2020 has been waived.

This also applies to retirees who turned 70 1/2 in 2019 and are required to take their RMD by 4/1/20. If the retiree that turned 70 1/2 in 2019 still intends to take their RMD, this must happen by April 1, 2020—otherwise, the same penalty for late withdrawal will be applied.

Charity

Above-the-line charitable contribution—For tax year 2020, if a taxpayer does not itemize deductions, they can deduct up to $300 in addition to standard deduction for cash charitable contributions (no stock contributions).

Charitable contribution limitation by AGI—The 60% adjusted gross income limitation has been removed for 2020 (other than from donor advised funds).

Businesses

Employee Retention Payroll Tax Credit

  • The Employee Retention Payroll Tax Credit cannot be used in conjunction with the Payroll Protection Program or any other loan where payroll costs are forgiven.
  • Employee retention credit is equal to 50% of qualified wages with a cap of $10,000 wages. Maximum credit per employee is $5000.
  • The employer’s gross receipts must be 50% or less than the same calendar quarter in 2019 to qualify.
  • For employers with 100 or less employees, qualified wages are defined as wages paid for all employees during the period—whether they were able to work or not. For employers with 100 or more employees, qualified wages are defined as wages paid to employees not providing services.

Deferral of Employer Social Security Taxes

The deferral of employer social security taxes cannot be used in conjunction with the Payroll Protection Program. This allows an employer to defer their portion of Social Security taxes from March 27, 2020 to January 1, 2021. 50% is due by December 31, 2021 and the remainder by December 31, 2022.

Bonus Depreciation

This allows employers to expense qualified improvement property under the section 168 bonus depreciation rules.

State and Federal Tax Filing and Payment Updates

Individuals

General Information



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