As the coronavirus (COVID-19) continues to affect our country and local communities, we hope this note finds you and your families healthy and safe. Since our last email on March 20th, there have been significant tax changes enacted on both the Federal and state level.
The Treasury Department and the IRS announced that the Federal income tax filing deadline is automatically extended from April 15th to July 15th, and all 2019 and 1st quarter 2020 Federal income tax payments can be deferred to July 15th without penalties and interest, regardless of the amount owed. The IRS has also confirmed that the deadline to make 2019 IRA and HSA contributions has been extended to July 15th as well.
As of today, 37 states have followed suit to change their income tax filing and payment deadline to July 15th, including both Kansas and Missouri. In addition, the City of Kansas City, MO has extended its 2019 Earnings Tax filing and payment deadline to July 15th. For those clients who have filing requirements in the handful of states that have extended their filing deadline to a date before July 15th, we will ensure that all returns are filed by the applicable extended due date.
Additionally, we want to provide some clarity to the tax-related provisions of the recently enacted CARES Act. The recovery rebates for individuals has garnered the most interest and has received a great deal of media attention, but there is still some general confusion around the specifics of these payments.
The recovery rebates are structured as advanced income tax credits against 2020 income, which is slightly different than a straightforward “stimulus check”. The amount of the rebate will be calculated using the following criteria:
- Eligible individuals will receive a rebate payment of up to $1,200, or $2,400 for married couples, with parents receiving an additional $500 for each child under the age of 17.
- The payments will begin to phase-out for those with income exceeding the following amounts:
- $75,000 for single filers
- $150,000 for married couples filing jointly
- The payments will completely phase-out for single filers with income exceeding $99,000 and joint filers with no qualifying children and income exceeding $198,000.
- The IRS will calculate the amount of each person’s rebate payment based on either their 2019 tax return or their 2018 tax return if they have yet to file their 2019 return.
- There is currently no information available on what date 2019 returns will need to be filed by to be used in the calculation of the payments.
Although the initial rebate payments will be made based on 2018/2019 income, the final amount of the rebate will ultimately be based on 2020 income. This means that if you had too much income in 2018/2019 to receive a rebate payment in advance, you may still qualify for a rebate on your 2020 tax return if your 2020 income falls below the above threshold.
However, for those that receive a rebate payment in advance that ultimately will not qualify for it, they will not be required to pay back any amount received on their 2020 tax return. For additional information on how and when the rebate payments will be made, please visit the IRS’s Economic Impact Payments site.
We appreciate your continued patience and flexibility as we work through these difficult times. For those who need to provide us with tax information, tax documents can still be sent to us the following ways:
Document deliveries and drop offs can be made in the drop box on the east side of our North Kansas City office located at 2101 Burlington North Kansas City, MO 64116.
Scan and upload documents electronically to your Windward Portal. If you have questions about accessing your Windward Portal please email info@windwardfp.com.
UPS and FedEx deliveries should be addressed to our North Kansas City office:
2101 Burlington
North Kansas City, MO 64116
USPS Mail packages can be sent to us at our North Kansas City office location:
2101 Burlington
North Kansas City, MO 64116
Please call us at 913-381-7411 or email info@windwardfp.com with any questions you may have.
Sincerely,
Brad Harrison
Tax Manager