Update on COVID-19 Relief for Individuals
Update on COVID-19 Relief for Individuals and Businesses
The federal and state coronavirus relief efforts have taken dual approaches of loans and grants through various federal and state agencies as well as tax relief through the IRS and state tax agencies. This communication is focused on the tax aspects, including updates on programs we have mentioned previously. Some of this information has changed from previous articles as guidance from the government changes. Charitable organizations should keep in mind that many of the benefits being provided to businesses may also apply to them.
Part I - Individual Provisions
Economic Impact Payments
The IRS is distributing the $1,200/person and $500/child direct stimulus payments first via direct deposit. The IRS will only use direct deposit if it has a bank account confirmation within the last two years. If the IRS does not have your current bank information on-file, then they will issue a check, which could significantly delay the payment. The IRS has set up a site for individuals not required to file tax returns to provide their information here. The IRS has indicated that next steps are to provide a similar portal by April 17,2020 for individuals that have filed to provide updated direct deposit information, as well as providing an estimated payment delivery date. The link to IRS economic impact payment information center below provides links to these sites.
Within 15 days of making a payment, the IRS will send a letter to the individual(s) to confirm the payment. This letter should include a contact phone number if you didn’t receive the deposit or check. Do not attempt to proactively call the IRS right now as their call centers are closed.
The IRS is urging taxpayers to be on the lookout for scams related to the economic payments. Scam artists could use this as a cover to steal personal information and money. The IRS will not call, text, email or contact you on social media asking for your information. You should not provide your information through any means other than from a direct link on the IRS website.
For additional details please click here to see the IRS economic impact payment information center. To determine if you might be getting a rebate use the calculator provided by the AICPA - CARES Act Stimulus Calculator
Extended Filing and Payment Dates
The IRS and many state governments, including Louisiana, have extended deadlines for filing and making payments for 2019 income taxes. Please note the extension also impacts funding dates for IRA and HSA for 2019.
IRS
Income Tax filing and payments due for items due on or after April 1, 2020 are extended to July 15, 2020. For details click here. At this time payments that are due on other dates have not been changed.
First and second quarter estimated payments have been extended to July 15, 2020. Prior instructions indicated the first three federal 2020 quarterly estimates would be due on October 15, 2020, but this has changed. As of now, the Third quarter federal estimates are still due on September 15, 2020.
Louisiana
Income Tax filing and payments due on April 15 and May 15,2020 are extended to July 15, 2020. For additional information see Louisiana department of revenue site here.
Has stated it cannot extend the quarterly payment deadlines, but they will waive the penalty on the late payments of estimated tax for 2020 that would be due April 15,2020 if the taxpayer requests a waiver.
Charitable Contributions
Individuals will be eligible to take an “above-the-line” tax deduction in 2020 of up to $300 in charitable contributions even if they use the standard deduction. In addition, cash charitable contributions for those who itemize will be deductible up to 100% of AGI rather than 60%. These measures are intended to help keep up donations to charities, who are also struggling.
Retirement Plan Impacts
See our previous insights for more details
Expanded Qualified Medical Cost
HSA and MSA qualified medical costs are expanded to include amounts paid for over the counter medications even if not under orders of a prescription starting after December 31, 2019. The rules have also been expanded to include menstrual care products.
As the above programs are still very new, it is likely that government agencies will continue to tweak the programs to fit real-world circumstances, so be on the lookout for updates. If you have further questions, please contact our office at (225) 927-6811.
Sincerely,
Alex Tucker, CPA and Guy Reddick, CPA
Faulk & Winkler, LLC
Baton Rouge, Louisiana