As the coronavirus (COVID-19) continues to affect local communities and global economies, you may have concerns about your financial well-being or you may be wondering about how recently passed legislation impacts you. We’re providing a high-level summary of some of the key provisions impacting individuals, and we recommend discussing your particular circumstances with us in more detail.
Several recently enacted tax changes and new or expanded benefits might be helpful to you.
Income tax provisions:
- The IRS has provided broad relief, extending filing and payment deadlines to July 15, 2020.
- Federal estimated tax payments due on or after April 1, 2020 and before July 15, 2020 can be paid on July 15, 2020 without penalty. Therefore, both the April 15, 2020 and the June 15, 2020 federal estimated tax payments are due July 15, 2020.
- New York State estimated tax payments due on or after April 15, 2020 can be paid on July 15, 2020 without penalty. To date, the June 15, 2020 payment must still be made on or before June 15, 2020.
- Payments to individuals of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child are expected to be delivered around mid-April but could take up to 20 weeks.
- The recovery rebate begins to phase out for taxpayers with adjusted gross income (AGI) above $150,000 for joint filers, $112,500 for heads of households and $75,000 for other individuals.
- The payment is not taxable.
- Through the end of the year, individuals who are under 59 ½ years old can take up to $100,000 in coronavirus-related distributions from retirement plans without the usual 10% penalty for early distributions. The distributions may be repaid within three years and any resulting income inclusion can be taken over three years.
- If you were over 70½ on December 31, 2019, you won’t have to take required minimum distributions (RMD) in 2020. If your retirement assets have taken a hit, not having to take an RMD may allow those assets to recover some value before you liquidate them.
- If you have a federally-held student loan, your payments will be suspended through September 30, 2020 and interest won’t accrue during this period. Note that this relief does not apply to private student loans.