2020 Stimulus (Rebate) Checks
The IRS will begin processing stimulus payments by direct deposit to your bank account of record based on your 2018 or 2019 tax return, if you have already filed. Individuals are provided with an advance credit against their 2020 income tax: $1,200 for single taxpayers and $2,400 for married filing joint, plus $500 per dependent. Income phaseouts apply and the initial credit is based on your 2019 adjusted gross income (AGI) or 2018 AGI, if 2019 has not yet been filed. However, there will be a reconciliation of the credit on your 2020 income tax return.
IRA, HSA, MSA, Coverdell ESA contribution date extended
When Congress extended the 1040 due date, it extended the due date for 2019 deposit contributions to these types of accounts, until July 15, 2020. When making a 2020 deposit for 2019 tax year, you need to ensure the trustee correctly credits the deposit to tax year 2019.
Early Distribution Penalty Waiver
The 10% early retirement account withdrawal penalty does not apply to any corona-virus related distribution. The exemption only applies to the first $100,000 of distributions per taxpayer in 2020 but applies to all IRAs and withdrawals from qualified defined contribution pension plans.
This provision also allows a 3-year period beginning on the date the distribution was received to redeposit any or all of the withdrawn amount to reduce taxability, and the redeposited amount is treated as if it were a qualified tax-free 60-day rollover and not subject to an excess deposit penalty.
Additionally, mandatory federal withholdings rules do not apply to the distribution if they come from a qualified plan under Act Section 2202(a)(5).
Required Minimum Distributions
The Cares Act waives the required minimum distribution rule for 2020.
SMALL BUSINESS ASSISTANCE
In a previous newsletter, we provided links to apply for the various loans and grants to assist small businesses during this crisis. It is imperative that you apply for these loans as soon as possible before the funds are exhausted.
The CARES Act temporarily expands eligibility for Economic Injury Disaster Loans (EIDL) administered by the Small Business Administration (SBA) and provides an emergency advance of up to $10,000 (grant) to small businesses and private non-profits harmed by COVID-19.
Apply for the grant and EIDL loan here https://covid19relief.sba.gov/#/
Paycheck Protection Program Loans (PPP) Small Businesses can apply NOW
Independent contractors and self-employed individuals can start applying April 10, 2020
You will need to apply through an SBA approved lender. If you have an existing banking relationship, we suggest you start with them. There is a possibility that a portion of this loan can be forgiven.
Small businesses can apply for all 3 programs (EIDL, grant and PPP)
Qualified Improvement Property now qualifies for 15-year recovery period
Applies to any improvement to an interior portion of a nonresidential building and is retroactive to January 1, 2018! So, it’s possible to amend 2018 tax returns for refunds, if applicable.
The following programs are available for businesses that DO NOT take advantage of the other SBA loan programs and we recommend utilizing those funding programs before considering these options.
Payroll Retention Credit applies only against the employer share of FICA and has employee limitations.
Payroll Tax Delayed Deposit Program allows you to postpone payment of the employer share of FICA payroll taxes only incurred from 3/27/2020 thru 12/31/2020 with annual re-payment requirements. However, we suggest you continue paying payroll taxes timely.