If you did not obtain a Paycheck Protection Program (PPP) loan during the first round, prepare your application now and submit it to your favorite SBA lender as soon as possible, preferably today. The SBA resumed accepting applications on April 27.
The CARES Act enacted “Recovery Rebates” — which are being treated as advance refunds of a new 2020 tax credit. Under this provision, individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit is phased out for taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000 for other individuals. The credit is not available to nonresident aliens, individuals who can be claimed as a dependent by another taxpayer, and estates and trusts. Taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund payment they receive.
Source: The AICPA Journal of Accountancy
Essentially, this is a new 2020 tax credit for individual taxpayers that meet the above criteria. Therefore, if your 2020 AGI were to exceed your 2019 AGI on which the advanced rebate check is based, or vis-a-versa, the credit will be adjusted when filing the 2020 return.
This was signed into law on Friday, March 27, 2020.
Pursuant to IRS Notice 2020-18, income tax filings have been extended to July 15 from April 15 in response to the coronavirus pandemic. These new due dates apply to individuals, corporations, estates and trusts.
According to the Wall Street Journal, “the new filing delay appears to extend other deadlines for taxpayers, such as the April 15 deadline for making contributions to individual retirement accounts, Roth IRAs and Health Savings Accounts. The new guidance doesn’t explain whether an automatic six-month extension to complete tax paperwork will remain Oct. 15 or be extended to Jan. 15, 2021.”
The IRS announced last week that July 15 would be the due date for payments and that there would be no charge of interest or penalty for payments that would have been payable on the traditional April 15th due date. It was unclear at that time whether filing & payment due dates would be the same --- they are now the same!
The Notice allows taxpayers to delay their 1st quarter estimated tax payment that would have been due on April 15th. The 2nd quarterly estimate due date remains at June 15th.
It is important to note that the IRS is processing tax refunds. Electronic return filers with no discrepancies can generally expect a direct-deposited refund in 10 -14 days. States will differ.
To track State changes to the tax filing and payment deadlines, see link provided by the American Institute of CPAs.
We live in a fast-paced society in complex times. Few decisions are simple and easy, and a wrong choice can be costly. Proper planning and on-going consultations with a qualified and licensed CPA, can often lead to better results. Whether it’s deciding on a capital expenditure for your business or setting up a retirement plan, we’re here to help.
Our clients benefit from our year-round availability to help them with their tax preparation & planning, accounting & financial reporting, and a multitude of advisory matters.
David McIntee, CPA (N.C. license #32629)
After hours appointments are available to accommodate your schedule, including evenings and Saturdays during the tax filing season.
400 Millstone Dr, Suite 202, Hillsborough, NC 27278
08:30 am – 05:00 pm
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