Tax and IRA Contribution Deadlines Extended
By Lynn A. Ferraina, Advisor
Excellence is never an accident, it is a result of high intention, sincere effort, intelligent direction, skillful execution, and the vision to see obstacles and opportunities. Today we may see obstacles but as history has shown us there will be plenty of opportunities in and after this stressful time we are experiencing.
By keeping a positive attitude we will find opportunities. President Lincoln said so many years ago “this too shall pass”. And it will. The Treasury Department and the Internal Revenue Service have already begun taking steps to provide payment relief to taxpayers. Some of the relief efforts include:
Tax Day Postponement
- Tax filing and payment deadlines are no longer due on April 15th. In response to the COVID-19 pandemic, the IRS has extended the income tax deadline to July 15th. All taxpayers do not have to file their tax returns or pay any owed income taxes until July 15th.
- The relief applies to individuals, regular corporations (C corps) with a calendar-year end, and others who were originally required to file an income tax return by April 15.
- The July 15th deadline is an automatic extension, taxpayers do not need to file any additional forms in order to qualify.
- Self-employment taxes are also deferred to July 15 and there is no limit on the amount of tax payment that is postponed.
- The relief also applies to estimated first-quarter tax payments for the tax year 2020 that were due on April 15, 2020, but, as of now, second-quarter payment is still due June 15.
- Gift tax returns filed on Form 709 and generation-skipping transfer taxes, however, estate tax returns are not extended.
- IRS will not be charging interest or penalties from April 16th through July 15th. Interest and penalties will start accruing on July 16 on overdue taxes or late returns.
- You can still file for an extension which will extend the payment deadline to October 15th, but this extension only applies to tax filing. You will still need to pay any owed taxes by July 15th to avoid penalties.
- If you already filed and owe taxes, but have not paid yet, you still do not have to pay until July 15th.
If you filed and have scheduled payment for April 15th, the IRS will not automatically reschedule the payment, you will have to do it. If you authorized electronic funds to withdraw as part of filing your return, you will have to revoke the payment by calling the U.S. Treasury Financial Agent at (888)353-4537. If you scheduled the payment by debit or credit card, you will need to contact the card processor to suspend payments.
More Time to Contribute to Your IRA
- Individuals have more time to make IRA contributions for 2019. Your payment is not due until July 15th.
- Be sure to tell your IRA custodian to apply the contribution to the 2019 tax year.
- The most that can be contributed for 2019 is $6,000, plus an additional $1,000 for people who were 50 or older last year.
IRA Mandatory Distributions Suspended
- Those individuals who withdraw a mandatory required minimum distribution (RMD) on their IRAs will be able to forgo taking the distribution for 2020.
- The RMD delay also applies to beneficiaries of inherited IRAs
- If someone deferred their 2019 RMD to 2020 and would have two RMDs due this year, both are waived.
- 2020 distributions taken within the last 60 days can be put back into IRA via an indirect rollover, provided you have not made any other indirect rollovers in the past 12 months.
The coming weeks and months will test the resolve of many, but that is why our team is here, to guide you through the triumphs and the turmoil. If you have questions about the new deadlines or if you want to suspend your IRA distribution, please do not hesitate to reach out to your CAS advisory team.
We send our best wishes to you and your family this Easter and Passover!
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation. Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.
Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. Federal tax laws are complex and subject to change. This information is not intended to be a substitute for specific individualized tax or legal advice. FSC Securities Corp. does not offer tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.