Update on 2020 Tax Law Changes Enacted in Response To Coronavirus
McCarthy Fingar’s tax lawyers always stay abreast of changes to the tax laws and procedures, especially during the coronavirus emergency.
We set forth below highlights of 2020 tax-related changes that may be relevant to you:
Extensions of Time to File Tax Returns and Make Payments
- The deadline for filing returns for and paying Federal Income Taxes has been extended from April 15, 2020 to July 15, 2020 without penalty or interest. However, if a taxpayer is entitled to a refund, filing earlier will accelerate the payment of the refund.
- Governor Cuomo has announced that the deadline for filing for and paying New York State Income Taxes have also been extended from April 15th to July 15th without penalty or interest.
- The deadline for filing returns for and paying Federal Gift or Generation Skipping Transfer Taxes required for such gifts or transfers made during 2019 has been extended from April 15, 2020 to July 15, 2020 without penalty or interest.
Economic Impact Payments from the Federal Government
Under the Federal government’s new program, eligible taxpayers will receive a stimulus payment from the Federal government. The payments are $1,200 for individuals, $2,400 for married couples filing a joint return, plus an extra $500 for each dependent child under age 17. A brief summary is set forth below:
- The full amounts, however, are only for individuals with adjusted gross incomes not exceeding $75,000. For taxpayers filing as head of household, their adjusted gross incomes may not exceed $112,000. For married couples filing jointly, their adjusted gross incomes may not exceed $150,000.
- The payment amount is reduced by $5 for each $100 in adjusted gross income to the extent that a taxpayer exceeds these limits.
- For taxpayers who have already filed their 2019 income tax returns, their 2018 returns will be used to compute the stimulus payment.
For more information and updates on these payments, go to https://www.irs.gov/coronavirus.
Taxpayers with IRAs and Similar Retirement Accounts
Taxpayers with IRAs and Similar Retirement Accounts get a major tax break. A brief summary of changes for 2020 is set forth below:
- There are no Required Minimum Distributions from such accounts in 2020.
- During 2020, IRAs and similar employer plans can now be tapped before attaining age 59 ½ without penalty for a “coronavirus related distribution,” up to $100,000. These include distributions to the taxpayer who comes down with coronavirus or has a spouse or dependent who does, or who suffers a job loss, layoff, quarantine or other financial hardship as a result of the coronavirus pandemic. Any such monies withdrawn remain taxable, but, unless the taxpayer elects otherwise, the money is ratably taxed over three tax years.
- The amount that someone can borrow from a 401(k) or similar plan was enlarged generally from $50,000 to $100,000 from March 27, 2020 (the date of enactment of the law) to September 23, 2020. In addition, the time to repay already outstanding loans which would have fallen due from March 27, 2020 to December 31, 2020 is extended for one year.
McCarthy Fingar’s Lawyers Can Help
The above highlights for individuals some of the tax law changes that have been implemented to provide relief during this difficult period. If you have any questions, speak to your tax advisers, including the tax lawyers at McCarthy Fingar.
Call or email one of our tax lawyers described below. WE ARE WORKING and will respond promptly: