Tax Guru – Ker$tetter Letter

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Archive for June, 2020

Tax Day Remains July 15–File Extensions For More Time

Posted by taxguru on June 30, 2020

After a lot of speculation that the official Tax Day for 2019 income tax returns would be moved out to September 15 or October 15, IRS ended the confusion with a news release.

Taxpayers should file by July 15 tax deadline; automatic extension to Oct. 15 available

The big difference between having IRS just push the Tax Day to October 15 versus us filing the 4868, is when any expected tax balances need to be submitted to IRS and the States.  IRS pushing Tax Day to 10/15 would have meant that no form would need to be filed by July 15 and no money would have to be sent in until Oct 15.

I had actually been expecting the additional delay, not just for the hassles of getting everything together to prepare 2019 tax returns by July 15, but also for the fact that allowing people to hold onto their 2019 and 2020 tax payments until October 15 would have been a much more efficient method of providing economic stimulus money to people than the previous method was.  Of course, this is SOP for government operations, to choose the least efficient method of doing things

Most State tax agencies have been piggy-backing on the IRS deadline, so extensions should be filed with them as well. Check your states’ websites to be better informed.  As of today, I notice that the AICPA’s chart of State tax filing dates hasn’t been updated since 6/18/20.  Hopefully, that will be amended soon to take into account the various States’ conformity or not with IRS’s declaration.

I am a little disappointed that Tax Day wasn’t moved until later, but I am grateful that at least IRS didn’t wait until July 14 to spring this announcement on us.  That gives us two weeks to do rough calculations of 2019 taxes and prepare the extension forms.

Posted in extensions, TaxDay | Comments Off on Tax Day Remains July 15–File Extensions For More Time

Reduced Stimulus Payments

Posted by taxguru on June 4, 2020

From a Client:

Good Morning Kerry I’ve a question ~ I received my “Economic Impact Payment “ due to COVID-19 I understood the checks to be $1,200.00 …mine was only $875.60 Were taxes to be taken out of these?

 

My Reply:

What you received is actually the correct amount per the current payment schedule. The amount can be as high as $1,200 per person, but is phased down for people whose most recently reported AGI was more than $75,000. I just used a handy phase-out calculator that I found on the web and entered your 2018 AGI of $81,488. Attached you can see the result of $876.

IRS-StimulusCheckAmount

It is still possible that you can get the additional $324, but that won’t be for more than a year. When we prepare your 2020 Federal income tax return, there will be a schedule to recalculate the proper amount using your 2020 AGI. If you qualify for more than the $876, you will get a credit for the extra amount. As it is currently being discussed, if you actually end up qualifying for less than what you received, you will not be forced to pay back the over-payment. That could change by next year. All of these special Covid related programs are still very fluid and being tinkered with constantly. There is even talk right now of a second round of stimulus payments in the next few months; so there will be no end to the confusion.

So, there is no need to contact IRS about your payment. They did send you the correct amount for this first round of payments.

I hope I have explained this adequately. Let me know if you have any other questions.

Kerry

Posted in COVID-19, IRS | Comments Off on Reduced Stimulus Payments