Tax Changes Due to Covid-19: Summary

I’m sure you’ve noticed, howard, that
our federal government has launched some
massive and well-intentioned efforts to try
to help small businesses get through the
COVID crisis without losing their business.

The intent was great, in my opinion, but the
implementation has fallen far short of
perfection, due primarily to the massive
scale and the very tight deadlines put on
the roll-out.

Some rules are being changed “mid-game;”
some details provided initially turned out to
be incorrect and needed to be corrected
after-the-fact, and some of them produced
unintended consequences, requiring some
back-peddling.

Changes, corrections and clarifications
continue to be issued on a near-daily
occurrence, which is why no one has yet
produced a comprehensive summary of
all these new programs.

What follows is a STATUS REPORT on
on several of the tax-related changes
implemented as a result of COVID-19
…as of today, at least…

NEED TO BORROW FROM YOUR 401(K)?
If your need is COVID-related and you are
under 59½, you can borrow the entire balance
(up to a maximum of $100,000) there will NOT
be a 10% early-withdraw tax penalty if you
repay it within three years.

WHAT ABOUT IRA CONTRIBUTIONS?
The deadline for making contributions to
your IRA would normally have been April
15 for tax-year 2018, but that deadline also
has been extended to July 15. The max
you can contribute for 2019 is $6,000 (plus
another $1,000 if you were 50 or older at
the end of last y ear).

EMPLOYEE RETENTION CREDIT
UNDER THE “CARES ACT”
Many questions are finally being answered
about this tax credit that is intended to
encourage businesses to keep employees
on their payroll.

The refundable tax credit is 50 percent of
up to $10,000 in wages paid by an eligible
employer whose business is being financially
impacted by COVID-19. Details available at
irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

TAX FILING DEADLINES EXTENDED
The tax filing deadline for all American taxpayers
who file Individual Tax Returns has been
extended to July 15, 2020. If you will owe
taxes for 2019, interest and penalties are
waived for the period.

If you need even more time, you can file
IRS Form 4868, which will extend your
filing deadline to Oct 15. Extension is
automatic IF you file it BEFORE July 15.

ALREADY FILED 2019,
BUT STILL OWE TAXES?
If you have already filed your 2019 tax
returns, and owed additional taxes that
you couldn’t pay, you have up to July 15
to pay the taxes, free of all interest and
penaltie s, after which they will begin to accrue.

CHANGES TO IRS COLLECTION ACTIONS
LIENS and LEVIES:
Suspended from April 1–July 15.
AUDITS:
No in-person audits until July 15.
No new correspondence audits until July 15.
INSTALLMENT AGREEMENTS:
Payments may be pos tponed until July 15.

RETURN OF “ENTERTAINMENT”
TAX-DEDUCTIONS? MAYBE.
President Trump wants it reinstated to help
restaurants rebound. Stay tuned.

GOT A CALL-IN QUESTION FOR IRS?
Don’t hold your breath for an answer. Most
call-in operators have been laid off. (Not to
worry – their answers are wrong 80%+ of
the time anyway.)

Most Taxpayer Advocate Offices are either
closed or running on a skeleton crew.
Bottom line: Don’t bother calling the IRS.

REMEMBER: The above information is
deemed to be accurate as of the date of
this email, but much of this info is still
subject to additional changes and revisions.

Helping Create Tax-Smart Small-Business Owners
                   Dr. Ron Mueller
Author, Speaker & Small-Business Tax-Savings Coach

P.S.
For details on COVID Filing and Payment Deadlines see
IRS.gov/newsroom/filing-and-payment-deadlines-questions-and-answers

P.P.S.
The new 2020 Edition of “WINDFALL Tax-Savings
APPROVED for Small-Business Owners,” is now
available for shipment. Click HERE for details.


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