The IRS has announced relief for required minimum distributions (RMDs) that were wavied under the CARES Act. The 60-day rollover for previously-taken 2020 RMDs from certain retirement accounts has been extended to August 31, 2020. For more information, see the full press release.
Some taxpayers may receive their Economic Impact Payment on a new EIP Debit Card. If they don't have your direct deposit information, the Andover, MA and Austin, TX Service Centers will send out nearly 4 million debit cards in place of paper checks. (Returns for Michigan residents are usually processed at the Fresno, CA Service Center.) For more information, here is the full press release.
Economic Impact Payments made to anyone who died before receipt of the payment should be returned to the IRS. Return the full amount unless the payment was made to joint filers and one spouse had not died before receipt of the payment; in this case, only the portion of the payment made on account of the decedent must be return, which would be $1,200 unless the adjusted gross income exceeded $150,000. See this IRS FAQ #41 for information on returning payments.
UPDATED DUE DATES
The IRS due dates for IRS forms 1040, 1041 and 709 (gift tax), Michigan income tax returns (MI-1040, MI-1041), Michigan city income tax returns, and the related first quarter estimated tax payments that are normally due April 15, 2020 can be filed and paid by July 15, 2020 with no interest or penalties. Similarly, Michigan city income tax returns and payments that are normally due April 30, 2020 can now be filed and paid by July 31, 2020 with no interest or penalties. IRS and Michigan estimates for the second quarter are now also due July 15, 2020. Unfortunately, we are still waiting for similar announcements about most other income tax and other forms and payments that will be coming due in the next several weeks. (While the FinCen 114 Report of Foreign Bank and Financial Accounts (FBAR) is still due April 15th, you will automatically be granted an extension to October 15 by simply failing to meet the deadline; there is no need to request this extension.)
EMPLOYEES, SELF-EMPLOYED WORKERS, GIG WORKERS, AND INDEPENDENT CONTRACTORS
Most employers are required to offer sick leave and family medical leave to employees who are affected by the Coronavirus effective April 1, 2020 . This Department of Labor Poster describes the rights available to most employees.
You may also qualify for Pandemic Unemployment Assistance (PUA) benefits available through the Michigan Unemployment Insurance Agency (UIA) if you are laid off, diagnosed with COVID-19, quarantined, caring for another person who has been diagnosed or is quarantined, or caring for another person due to closure of their school, child care, or other care program. Workers who typically would not qualify for uneployment benefits, including workers with limited work history or low wages, self-employed workers, gig workers, and independent contractors who are unable to work due to COVID-19 may also be able to claim benefits. Qualifying claimants will receive their calculated benefits (up to maximum benefit of $362 per week) plus an additional $600 per week in Pandemic Unemployment Assistance. For information about filing a claim, see UIA Fact Sheet #160 Claiming Unemployment Benefits in Michigan (COVID-19 Guide).
(UIA asks claimants to file claims according to their daily schedule, with last names beginning with letters A-L to call on Mondays and Wednesdays or file online claims on Mondays, Wednesdays and Friday; claimants with last names beginning with letters M-Z are asked to call on Tuesdays and Thursdays or file online claims on Sundays, Tuesdays and Thursdays. Friday and Saturday are open for anyone who could not call during their allotted window, and Saturday is open for anyone who could not file an online claim during their allotted window. Online claims can be filed 24/7, but UIA recommends applying online between 8:00pm and 8:00am to avoid peak times. Claims may also be made by phone 8:00am - 6:00pm Monday through Friday or 7:00am - 2:00pm Saturday by calling 866-500-0017.)
Are you a "Critical Infrastructure Worker"? Michigan Attorney General Dana Nessel has created a webpage to help answer your questions about the legal rights of employees and employers under Executive Order 2020-21 (COVID-19).
THE "CARES ACT"
The Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27, 2020, and includes numerous temporary and permanent changes to the Tax Code. Below is a summary of several key provisions we believe to be most relevant to our clients. This summary is not intended as advice; relief available to any specific individual or business may be subject to other qualifications, conditions, or limitations not detailed here.
Economic Impact Payments will be advanced based on 2019 tax returns (or 2018 if not already filed). Advances will be reconciled with the actual payment calculated using 2020 income. If your actual 2020 Economic Impact Payment is greater than your advance, you will receive the difference after filing your 2020 return; overpayments due to changes in income or qualifying children in 2020 will be forgiven. Payments are $1,200 for individuals ($2,400 for joint taxpayers) who do not qualify as dependents of another, plus $500 for each child under 17 qualifying for the child tax credit; payments are reduced for taxpayers with adjusted gross income (AGI) exceeding $75,000 for singles, $112,500 for head of household, and $150,000 for joint taxpayers by $5 for every $100 of the excess. Non-filers with no qualifying children under 17 who received a 2019 Form SSA-1099 (Social Security Benefit Statement) or RRB-1099 (Social Security Equivalent Benefit Statement), or received Supplemental Security Income (SSI) or benefits from Veterans Affairs (VA)in 2019 will automatically receive their Economic Impact Payments with no further. Other taxpayers who are required to file but have not filed their 2018 or 2019 returns are encouraged to file to receive their payments. No advance payments will be issued after December 31, 2020, but the credit can be claimed on your 2020 income tax return.
- ARE YOU NOT REQUIRED TO FILE, BUT DON'T QUALIFY FOR AUTOMATIC PAYMENT? Visit the IRS Non-Filers: Enter Payment Info Here page to give them the information they need to calculate your payment. Non-filers with qualifying children under 17 can also go here to claim the $500 payment per child.
- EXPECTING A CHECK BUT WANT DIRECT DEPOSIT? The IRS Get My Payment page lets you check your payment status and confirm your payment type. If your payment hasn't been issued and they don't have your direct deposit information, you can give it to them here.
- HAS YOUR MAILING ADDRESS CHANGED SINCE YOU FILED YOUR LAST RETURN? File IRS Form 8822 ASAP to change your address; even if your check is issued before it's processed, they will be able to reissue it more quickly. About two weeks after your Economic Impact Payment is made, the IRS will mail you a letter confirming how it was made.
- HAS YOUR DIRECT DEPOSIT INFORMATION CHANGED? To protect against fraud, you cannot change your direct deposit information. If the target account is closed, the bank will return the payment; Treasury will issued on a paper check and mail itto your last-known address.
- WATCH OUT FOR SCAMS TIED TO ECONOMIC IMPACT PAYMENTS! See the IRS warning about Coronavirus-related scams.
Unemployment benefits will include an additional $600 per week payment for up to four months, and are extended to self-employed workers, independent contractors, and workers with limited work history. When state benefits end, the federal government will extend benefits for an additional 13 weeks through December 31, 2020.
The 10 percent early withdrawal penalty on retirement account distributions up to $100,000 is waived for taxpayers facing certain virus-related challenges. These withdrawals are taxable over three years unless elected otherwise. Taxpayers have three years to recontribute the withdrawn funds without affecting retirement account caps. Eligible accounts include IRAs, 401Ks and other qualified trusts, certain deferred compensation plans, and qualified annuities. In lieu of distributions, some plans may allow loans up to $100,000. Required minimum distribution (RMD) rules are also waived for certain retirement plans in calendar year 2020.
A new $300 partial above-the-line charitable contribution deduction is available for non-itemizers beginning in 2020. The limit on charitable contributions for itemizers is also expanded.
Payments on federal student loans are suspended for six months, with interest waived for six months as well. Missed months of payments will still be counted as if paid for purposes of loan forgiveness programs.
(Last updated June 24, 2020)