Tax Changes for Individuals, Businesses and Others
IRS Filing and Payments Are Further Extended (information as of 4/20/20)
The IRS expanded the filing and tax payment requirements to July 15, 2020 for returns that would otherwise be due between April 15, 2020 and July 15, 2020. Individuals and companies should note that this includes the delay of 2nd quarter estimates until July 15, 2020. This most recent notice expands previous relief.
The IRS has expanded tax payer relief in stages. The relief started on March 18, 2020 with the delay of federal income tax payments until July 15, 2020; it then expanded to the delay of the filing of certain federal tax returns and payments, and then to cover delay in filing federal gift tax and generation skipping transfer returns and payments. The latest expansion is the broadest and provides relief for filing of a broad scope of tax returns and required payments until July 15, 2020. For those returns affected, what was originally due between April 15, 2020 and July 15, 2020 is now due July 15, 2020. This generally includes filings for individuals, trusts and estates, partnerships, corporations, generation-skipping transfer taxes, and returns included in Rev. Proc. 2018-58 such as exempt organization returns in the 990 series and the annual 5500 return of an employee benefit plan. This list is not meant to be all-inclusive and returns or payments not specifically identified in the Notices and Rev. Proc. 2018-58 may not be covered. In addition, state return deadlines are determined by each state and do not always follow the federal deadlines. Please consult with us to determine the applicability to your tax filing requirements.
For calendar year nonprofit organizations, the 990 (990, 990-EZ, 990-N, 990-T, 990-PF) returns are now due on July 15, 2020, with a further extension available when needed. All tax payments and estimates for unrelated business income tax and excise tax for private foundations that would otherwise be due between April 15 and July 15, 2020, are also not due until July 15, 2020.
Economic Impact Payments for Individuals
The IRS has already sent many economic impact payments to taxpayers and continues to calculate and automatically deposit others. These payments are $1,200 for an individual or $2,400 for a joint return with an additional $500 for each qualifying child. The payment is reduced for taxpayers who’s income exceeds $75,000 ($112,500 for taxpayers filing as head of household or $150,000 for taxpayers filing a joint return).
Increased Deductions for Charitable Donations – CARES Act Relief
The CARES Act allows for an above-the-line $300 charitable contributions deduction for taxpayers. You do not have to itemize to get this deduction. The donation must be cash paid to a qualified charity.
For taxpayers that do itemize, the annual giving cap is lifted. Taxpayers can use charitable donations to reduce 100% of their adjusted gross income to zero. This was previously limited to 60% of adjusted gross income.
The annual limit for corporate donations is also increased from 10% to 25% of taxable income.
Required Minimum Distributions from Retirement Plans are Waived – CARES Act Relief
The CARES Act removes the required minimum distributions from retirement plans during 2020.
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Resources Created by RitzHolman CPA
Relief Program Outlined (as of 4.20.20)
CARES Act Individual Tax Client Informational Email (4/2/20)
How Does the CARES Act Impact Your Nonprofit (as of 3/27/20)