April 2020
College & Tax Planning

As the numbers of confirmed cases of COVID-19 continue to increase in the United States, the federal government is taking action to reduce the impact on taxpayers. Specifically, the Internal Revenue Service (IRS) has announced that the tax filing season been pushed to July 15, 2020. We’ve put a simple guide together to help you navigate the new tax Filing Due dates. The following dates are based on the tax year 2019, coming due in 2020. 

Federal Taxes: The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their Federal income taxes on April 15, 2020, are automatically extended until July 15, 2020. This relief applies to all individual returns, trusts, and corporations. This relief is automatic, taxpayers do not need to file any additional forms or call the IRS to qualify. 

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020. Payments for estimated taxes are due on four different quarterly dates throughout the year: 

• 1Q — April 15 (this has been delayed until July 15, 2020 as well) 

• 2Q — June 15 (this has NOT been delayed yet, but likely will) 

• 3Q — September 15 

• 4Q — January 15 of the next year 

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. You will automatically avoid interest and penalties on the taxes paid by July 15. Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension by filing Form 4868. 

State Taxes: While it is expected that most state tax agencies will follow suit, like Arizona and Utah have already announced, more detailed information based on your specific state requirements can be found by clinking the link here: 

Retirement Plans: Individuals that receive a “coronavirus-related distribution” during 2020 will not be subject to the 10% penalty on early withdrawals of up to $100,000 from qualified retirement plans. 

A “coronavirus-related distribution” is one made during the 2020 calendar year to an individual, or spouse of an individual, diagnosed with COVID-19, or to an individual who experiences adverse financial consequences as a result of quarantine, business closure, furlough, layoff, or reduced hours due to the virus. 

These distributions are subject to regular income tax, although the tax may be spread over three years. 

Any “coronavirus-related distribution” may be treated as a non-taxable rollover contribution if the funds are repaid to the plan within three years of the date the distribution was received. 

Required minimum distributions (RMDs) for IRAs and defined contribution plans, such as profit sharing and 401(k) plans, are waived for 2020, including the first RMD for individuals that reached age 70½ during 2019. These are waived regardless of whether the taxpayer has been impacted by the pandemic. 

If an RMD has already been received during 2020, it may be rolled over or rolled back into the plan within 60 days in order to defer paying taxes on the RMD. 

Overall, these changes are good news for taxpayers, especially those who are cash-strapped by the economic slowdown and the coronavirus outbreak. If you have questions on how this may impact your financial plan, please don’t hesitate to reach out! 

If you have questions, please contact us.

MARKET UPDATE
FINANCIAL PLANNING
401(k) ALLOCATION
GRAPHIC OF THE MONTH

To download the April 2020 Newsletter: CLICK HERE