Below is a concise list of recent tax related news around filing deadlines and proposed CARES Act related tax updates for individuals. Please note that individual states are starting to adopt the IRS deadlines, but not all have. Clearstead continues to work towards meeting the April 15th deadline of filing or extending all tax returns. In circumstances where Federal payments may be needed, we will communicate expected timing; likely pushing payments back to July to allow our clients to maintain cash on hand during these extraordinary times.


IRS NOTICES 2020-18 AND 2020-20

  • The April 15, 2020 due date for filing 2019 federal income tax returns and remitting 2019 federal income tax payments has been automatically postponed to July 15, 2020. The April 15, 2020 due date for 2019 Gift and GST tax returns and tax payments are also postponed to July 15, 2020.  There is no need to file any extension forms to obtain this extended time to file.
  • The April 15, 2020 due date for 2020 first-quarter estimated income tax payments has similarly been extended to July 15, 2020.
  • This will apply to individuals, trusts, and estates, but only for income tax filings and payments.
  • Returns not eligible for the automatic extension include estate tax returns (Form 706), Form 5500, Form 990 and 990-PF, payroll tax returns and excise tax returns
  • There is no limitation on the amount of payment that may be postponed. Notice 2020-18 supersedes an earlier announcement that had implemented a maximum aggregated payment deferral amount of $1 million, which no longer applies.
  • Notice 2020-18 did not address second-quarter 2020 estimated income tax payments. The due date for these payments remains June 15, 2020. A future change to this due date is certainly possible.
  • Most states are announcing conformity with these changes. We will continue to track this closely.



Tax Credit Rebates
The legislation creates a tax credit of $1,200 for each filing adult who is not someone else’s dependent and $500 for each qualifying child. The credit begins to phase out at the adjusted gross income of $75,000 (single), $112,500 (head of household) or $150,000 (joint), and it is fully refundable in the final bill. Treasury is instructed to issue rebates “as rapidly as possible” and can rely on either 2018 or 2019 returns.

IRA and HSA Contributions
For 2019 IRA and HSA contributions, because the due date for filing Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA or HSA for 2019 is also extended to July 15, 2020.

2016 Tax Return Amendments
No extensions have been provided if you have a need to amend your 2016 tax returns.  If you filed your original 2016 Form 1040 before the April 15 due date, you’re considered to have filed the return on April 15 for purposes of the three-year rule. However, if you extended the return to October 15 you’re considered to have filed on the earlier of the actual due date or the October 15 extended deadline.

Required Minimum Distributions 

The provision waives the required minimum distribution rules for certain defined contribution plans and IRAs for calendar year 2020. This provision provides relief to individuals who would otherwise be required to withdraw funds from such retirement accounts during the economic slowdown due to COVID-19.

Early Withdrawals from Qualified Retirement Accounts
The legislation waives early withdrawal penalties for up to $100,000 in COVID-19-related withdrawals from qualified retirement accounts. The taxpayer has the option of repaying the amount and incurring no tax. If the taxpayer does not repay it, the income is included ratably over three years beginning with the year of the withdrawal. Individuals may make eligible distributions if they are diagnosed with COVID-19, have a spouse or dependent diagnosed with COVID-19, or suffer adverse financial consequences from a quarantine, layoffs or reduced hours due to business issues or lack of childcare. The legislation separately raises the limit on borrowing from an account from $50,000 to $100,000 (with the 50% vested accrued benefit limit also doubled), so taxpayers could, in some circumstances, temporarily withdraw as much as $200,000 from an account.

Healthcare Change
The bill would permanently expand reimbursable expenses for HSAs and FSAs to again include over-the-counter medicine, reversing a change from ACA. In addition, the bill would ease restrictions on direct primary care service and telehealth services with HSA high-deductible plans.

Charitable Giving
The bill allows an above-the-line deduction for up to $300 in charitable contributions of cash for taxpayers who do not itemize deductions in 2020.

For taxpayers who do itemize, the bill removes the AGI limit on deductions for qualified charitable contributions of cash in 2020. Contributions to donor-advised funds and non-operating private foundations do not qualify. The new qualified charitable deduction limit (up to 100% of adjusted gross income (AGI) must first be reduced by other gifts made which are subject to the 30% or 20% of AGI limitations.

Non-Corporate Net Operating Loss (NOL)
Previously, the TCJA limited business losses in a year to $250,000 for single filers, $500,000 for joint filers.  Excess losses became part of the NOL carryover to the next year.

The bill defers (retroactively) the effective date of the TCJA provision to tax years beginning after December 31, 2020. This allows for full utilization of all business losses in taxable years 2018-2020 and allows any excess NOL to be carried back 5 years.



Information provided in this article is general in nature, is provided for informational purposes only, and should not be construed as investment, tax or legal advice. These materials do not constitute an offer or recommendation to buy or sell securities. The views expressed by the author are based upon the data available at the time the article was written. Any such views are subject to change at any time based on market or other conditions. Clearstead disclaims any liability for any direct or incidental loss incurred by applying any of the information in this article. All investment decisions must be evaluated as to whether it is consistent with your investment objectives, risk tolerance, and financial situation. You should consult with a professional before making any investment or tax decisions.

At Clearstead, we create integrated, prudent, and custom strategies that bring clarity to you or your organization’s financial future.

Clearstead is an independent financial advisory firm serving wealthy families and leading institutions across the country. As a fiduciary, it provides wealth management services and investment consulting to help clients meet their financial objectives, achieve their aspirations, and build stronger futures.




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