As part of the coronavirus legislation and regulations, the federal and state governments have made many adjustments to tax rules and deadlines. The summary below seeks to highlight some of the changes and point out some of the traps as well as opportunities that have come with these tax changes.
Please note that the flurry of changes continues and that each state is doing different things with respect to state taxes.
Federal Income Tax Deadlines
- Filing and payment deadline has been extended to July 15 (this is automatic, there is no need to file for an extension). To receive an extension to October 15, you must file for an extension by July 15.
- Both 1st and 2nd quarter tax estimate payments are due July 15.
State Income Tax Deadlines
- Wisconsin is following the same Federal filing and payment deadlines.
- Other states vary and are continuing to change.
Gift Tax Deadline
- Gift Tax return filing and payment deadline has been extended to July 15.
529s & Refunds
- If you paid for qualified educational expenses with 529 funds but will now receive a refund due to cancelled classes or room and board, you may have to pay taxes plus a penalty. You may be able to avoid this by putting the refund back into the 529, but you must do so within 60 days of the refund. Be sure to keep all documentation and contact the 529 administrator for details.
- IRA contributions must be made by July 15 to qualify for a 2019 tax deduction.
- Required Minimum Distributions (RMDs) have been suspended for 2020. Careful analysis should be done to decide whether to take or skip a 2020 RMD. In addition, if you already took your 2020 RMD, you have the ability to roll it or any portion of it back into your IRA, provided you do so within 60 days of the distribution.
- Qualifying Charitable Distributions (QCDs) can still be made income tax free if you are in RMD status.
- The Payroll Protection Program (PPP) offers forgivable loans to qualifying small businesses. If interested, you should act immediately as funds are on a first come, first served basis. (UPDATE: It has been announced that PPP funds have now been exhausted. Additional funds may become available through new legislation.)
- Direct payments, subject to income limits of $75,000/single and $150,000/joint, are being made for $1,200/single, $2,400/joint, and $500/per child. These payments are based on your 2018 tax return, unless your 2019 return has been filed.
Please do not hesitate to reach out if you have questions or concerns by contacting your Legacy advisor or contacting our office at 920.967.5020 or email@example.com.
This information has been prepared by Legacy Private Trust Company for informational purposes. Any opinions expressed herein represent our current analysis and judgment and are subject to change. Actual results, performance, or events may differ based on changing circumstances. No statements contained herein should substitute for professional legal, tax, or other specialized advice.