The deadline for filing and payment of 2019 federal income taxes has been moved from April 15 to July 15, 2020, by the Internal Revenue Service (IRS).
The IRS confirmed that July 15, 2020, will also be the deadline to make 2019 contributions to IRAs and health savings accounts (HSAs). Deadlines associated with contributions to workplace savings plans are not affected.
2. Direct payments to many Americans
The CARES Act includes a provision to send most Americans direct payments of $1,200, or $2,400 for joint filers, plus $500 for each child.
The amount of the payments will be reduced for those with higher incomes. For individuals filing taxes as singles, the reduced amount begins at an adjusted gross income (AGI) of $75,000 per year and is completely phased out at $99,000. For joint filers, the reduced amount begins at $150,000 and payment is eliminated at $198,000.
Your AGI will be determined by your 2019 tax filing (or 2018, if 2019 is unavailable).
3. Some retirement account rules have been relaxed
The CARES Act offers some help to those with retirement accounts.
Required minimum distributions (RMDs) for 2020 are suspended for certain defined contribution plans and IRAs, including 401(k), 403(b), and governmental 457(b) plans as well as SEP IRAs, SIMPLE IRAs, and traditional IRAs. This includes the first RMD, which individuals may have delayed from 2019 until April 1, 2020.
Certain beneficiaries taking distributions from inherited IRAs may also skip the 2020 distribution when calculating their 5-year distribution period.
Affected, eligible participants in workplace retirement plans and IRA owners can take an aggregate distribution in 2020 of up to $100,000 from all retirement accounts without incurring the usual 10% early withdrawal penalty. The affected participant or IRA owner (including a spouse or dependent) would need to either be diagnosed with SARS-COV-2 or COVID-19 or experiencing adverse financial consequences as a result of an event, including but not limited to quarantine, furlough, lay-offs, reduced work hours, no available childcare, business closing or reduced business hours (self-employed), or other factors determined by the Secretary of the Treasury.
In addition, the income tax on the distributions may be spread evenly over 3 years. Or, the distribution may be repaid to an eligible retirement plan within a 3-year period.
Loan repayments for affected participants in workplace retirement plans may be delayed for one year. These changes will be in effect through 2020.
Note that your plan may offer other withdrawal options.
Keep reading here for other reliefs.