Covid-19 Resources & FAQ

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which passed on Friday, March 27th, contains a host of tax measures designed to help the economy as it suffers through the effects of the Covid-19 pandemic. 

How this affects our office:

As you may know, the United States Treasury announced extensions in both paying and filing Individual Income Tax Returns in the past few days, automatically extending them until July 15, 2020 as a response to the Covid-19 pandemic.

What this means for you is that we will not be filing extensions for those who do not have their personal tax paperwork in to us by April 15th. We will need to know, however, if you are unable to bring in your paperwork to us by the extended date so we can file an extension for you at that time.

We assure you that we are all healthy and working hard to complete the returns that have already arrived in our office for processing and encourage those who have not brought us your paperwork to do so at your earliest convenience. If you are unable to bring them in person, you may have a friend or family member drop off for you, you may drop it through our mail slot (located to the right of our front door), you can mail your paperwork in to us, or scan and upload to our website. We are also able to return completed tax returns by mail or digitally, if needed.

Please feel free to contact our office if you have any questions.

Included in the CARES Act

Stimulus Checks for individual tax payers – The payments are “recovery rebates,” which means they are a being treated as advance refunds of a 2020 tax credit. Taxpayers will reduce the amount of the credit available on their 2020tax return by the amount of the advance refund they receive.

  • Individuals making $75,000 or less ($150,000 for couples who file jointly & $112,500 for heads of household) will receive $1,200 ($2,400 for joint filers), plus an additional $500 for each child aged 16 years or younger.
  • For those who make more than the threshhold, the credit is phased out.
  • The credit is not available to nonresident aliens, individuals who can be claimed as a dependent by another taxpayer, estates, or trusts.
  • The amount you will receive depends on the Adjusted Gross Income claimed on your 2019 tax return (or your 2018 tax return if you haven’t filed yet this year).
    Click Here to Calculate How Much Your Check Should Be
  • If you filed taxes with the “Direct Deposit” option for refunds, you will receive your stimulus money sooner. If you have not yet filed your 2019 tax return and have not included your bank information in the past, doing so as soon as possible may speed up the rate at which you receive your payment. The Treasury also intends to launch a web-based portal for this purpose.

People who typically are not required to file a tax return

Social Security and Railroad Retirement recipients who are not typically required to file a tax return need to take no action. The IRS will use the information on the Form SSA-1099 and Form RRB-1099 to generate Economic Impact Payments of $1,200 to these individuals even if they did not file tax returns in 2018 or 2019. Recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits. Social Security Disability Insurance (SSDI) recipients are also part of this group who don’t need to take action.

For Social Security, Railroad retirees and SSDI who have qualifying children, they can take an additional step to receive $500 per qualifying child.

There are other individuals such as low-income workers and certain veterans and individuals with disabilities who aren’t required to file a tax return, but they are still eligible for the Economic Impact Payments. Taxpayers can check the IRS.gov tool – Do I Need to File a Tax Return? – to see if  they have a filing requirement.

If you don’t file taxes:

Use the “Non-Filers: Enter Your Payment Info Here” application to provide simple information so you can get your payment.

You should use this application if:

  • You did not file a 2018 or 2019 federal income tax return because your gross income was under $12,200 ($24,400 for married couples). This includes people who had no income. Or
  • You weren’t required to file a 2018 or 2019 federal income tax return for other reasons

If you receive these benefits, we already have your information and you will receive $1,200. Do not use this application if you receive:

  • Social Security retirement benefits
  • Social Security Disability Insurance benefits
  • Railroad Retirement and Survivor Benefits

Special note: People in these groups who have qualifying children under age 17 can use this application to claim the $500 payment per child.

Click Here to Apply

Charitable Deductions – The bill creates an above-the-line charitable deduction for 2020 (not to exceed $300). It also modifies the AGI limitations on charitable contributions for 2020 to 100% of AGI for individuals. The bill also increases the food contribution limits to 25%

Excess Loss Limitations – CARES repeals the the Excess Loss Limitation which disallowed excess business losses of non-corporate taxpayers if they exceeded $250,000 ($500,000 for married filing jointly).

Interest Limitation – For tax years 2019 & 2020, the adjustable taxable percentage was incresed from 30% to 50%. Also, taxpayers can elect to use 2019 income in place of 2020 for computation.

Health Plans – The rules for high-deductable health plans (HDHPs) are amended to allow them to cover telehealth and other remote care services without charging a deductible. Over the counter menstrual care products are also added to the list of items that cab ve reimbursed out of a health savings accountm Archer medical savings accountm or health reimbursement arrangement.

Payroll tax credit refunds – The bill provides for advance refunding of the payroll tax credits enacted in the Families First Coronavirus Response Act, P.L. 116-127. The credit required for paid sick leave and the credit for required paid family leave can be refundedin advance using forms and instructions the IRS will provide. They have been instructed to waive any penalties for failure to deposit payroll taxes if the failure was due to an anticipated payroll credit.

Employee Retention Credit – The bill includes a credit for those businesses that close due to the coronavirus pandemic. Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in qualified wages) for each employee.
Eligible employers are:

  • Employers who were carrying on trade or business during 2020 that was fully or partially suspended due to orders from an appropriate government authority limiting commerce, travel or group meetings due to the Covid-19 outbreak
  • Employers that have gross receipts that are less than 50% of their gross receipts for the same quarter prior year

Charitable Deductions – The bill creates an above-the-line charitable deduction for 2020 (not to exceed $300) and modifies the AGI limitations on charitable contributions for 2020to 25% of taxable income for corporations.

 

Payroll Tax Delay – The bill delays payment of 50% of employer payroll taxes until december 31, 2021; the other 50% will be due December 31, 2022. These figures include self-employment taxes.

Net Operating Losses – There has been a temporary repeal of the 80% income limitation for net operating loss deductions for years before 2021 with this bill. For losses arising in 2018, 2019, and 2020, a five-year carryback is allowed (taxpayers can elect to forgo the carryback).

Excess Loss Limitations – CARES repeals the the Excess Loss Limitation which disallowed excess business losses of non-corporate taxpayers if they exceeded $250,000 ($500,000 for married filing jointly).

Corporate Alternative minimum Tax (AMT) – The bill modifies the AMT credit for corporations to make it a refundable credit for 2018’s tax year.

 

 

 

 

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Everett, WA 98201

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Fax: (425)259-7048
jill@toyercpa.com

 

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