Federal Tax Filing and IRA Contribution Deadline Extended
- On March 20, Treasury Secretary Steven Mnuchin announced the tax-filing deadline for 2019 federal income tax returns has beenextended from April 15 to July 15, 2020 (IRS Notice 2020-18).
- However, if you have a tax liability in excess of $1M, it must be paid by April 15th regardless.
- The N.C. Department of Revenue (NCDOR) recently announced that they will extend the April 15 tax filing deadline to July 15 for individual, corporate, and franchise taxes to mirror the announced deadline change from the Internal Revenue Service.
- Confirmed by IRS, this extension also postpones the deadline for making 2019 prior-year contributions to traditional and Roth IRAs to July 15, 2020.
The CARES Act
- On March 27, 2020, President Trump signed into law themassive Coronavirus Aid, Relief, and Economic Security (CARES) Act.This legislation includes a waiver of required minimum distributions(RMDs) for 2020; it applies to company savings plans and IRAs, including both traditional and Roth inherited IRAs.
- The CARES Act impacts 2019 RMDs having a required beginning date of April 1, 2020. Any 2019 RMD amount remaining and not withdrawn by January 1, 2020 is waived.
- Roth Conversions can be done for those IRA Holders taking RMD Distributions without the requirement of taking the RMD first; any amount you desire to convert.
- New 10% early distribution penalty exceptions now apply.
- The CARES Act waives the 10% early distribution penalty on up
- to $100,000 of 2020 distributions from IRAs and plans for affected individuals. The tax would be due but could be spread evenly over 3 years, and the funds could be repaid during those 3 years.
- You can also contribute to your IRA & Roth until the July 15th date.
- The new law also affects company plan loans taken by affected individuals. First, the law increases the maximum amount of plan loans to the lesser of $100,000 (reduced by other outstanding loans) or 100% of the account balance. (The usual limit is the lesser of $50,000, reduced by other outstanding loans, or 50% of the account balance.) This rule applies to loans taken within 180 days from the bill’s date of enactment. Second, any loan repayments normally due between date of enactment and December 31, 2020 could be suspended for one year.
- Employers filing for Paycheck Protection Program also known as PPP;
- 75% of your LOAN MUST be put to payroll and you must maintain or rehire all past employees (laid off over the past 2 months) by June 15th OR the loan will not be forgivable.
- Its best to keep these funds in a separate checking account to pay rent, and payroll expenses or maintain a really tight accounting system for documentation purposes.