Pandemic coronavirus upend the economy and the lives to which we are accustomed. It also changed the rules for filing returns and other tax processes. About it writes USA Today.
This year, it should be noted several key changes, some of them are designed to ease the financial burden resulting recession. They include changes that affect the timing of filing of returns, retirement accounts and charitable deductions.
The new deadline for filing tax returns
Perhaps the most obvious change was the transfer of the regular deadline for filing tax returns and date of payment of taxes in 2019 from 15 April to 15 July 2020. Many taxpayers have already filed papers before the fashion industry really began to influence the economy at the end of February. For others, the postponement gave more time to bring the Declaration in order to make payments. The estimated payments for the first and second quarters of 2019 has also been delayed until mid-July.
Automatic renewal, an extension of the deadlines for the submission of applications 2019 to October 15 by sending form 4868 to the internal revenue Service (IRS), but the tax payments for the past year still needs to be completed before July 15.
Some changes deduction
After the tax reform in 2017, which resulted in the adoption of a standard deduction, fewer people klassificeret your deductions. This trend is likely to continue. But there are some noticeable changes.
One of the new rules for people receiving standard deductions is that they will be able to deduct up to $300 in contributions to charitable organizations, starting in 2020.
Also please note: medical deductions will be a bit easier to claim. These costs can be deducted for those who klassificeret if they exceed 7.5% of adjusted gross income. It was assumed that this limit will increase to 10%, which makes it difficult to write off such costs, but the easier threshold of 7.5% was retained on 2019 and 2020.
The basic standard deduction amount increased to $12 400 for one person and $24 800 for married couples submitting a joint Declaration in 2020. These figures increased by $200 and $400, respectively, in 2019.
IRA contributions are still available
A few weeks before the annual deadline for filing tax returns people invest money in a traditional or individual retirement accounts. Given the fact that this year the deadline for the submission of requests to 2019 postponed to July 15, this is an important moment for the season of IRA contributions.
In other words, you can still contribute to an IRA and count it for 2019. The base annual limit is $6000, plus an additional $1000 in contributions for people over 50 years. If you’re funding a traditional IRA deductible, it is one of the few remaining ways, to retroactively reduce tax bill for the year 2019.
The ability to make a deductible IRA contribution depends on your income, if you have a retirement account from the employer. Private entrepreneurs can also access for employees IRA with higher contribution limits.
Revision of pension credits
The rules affecting retirement, was confusing before, as a coronavirus, and recent legislation has changed several key provisions, at least temporarily.
Previously the General rule was that permanent withdrawals from traditional IRA accounts or accounts 401(k) taxed at ordinary income rates. Investors are withdrawing money before 59 years old, also typically receive a penalty of 10%.
Now you can avoid that 10% penalty if you are under 59, when withdrawing amounts up to $100,000 from retirement accounts. Another change allows you to pay associated with coronavirus spending for three years, reducing the tax consequences. And even better, you can put the money back into the retirement account, including over three years, and to avoid fines.
Payments in connection with the coronavirus
Federal aid payments in connection with the coronavirus, sent earlier this year will not be taxed, but you still need to pay attention to some details when you file a tax return in 2020 in the beginning of next year.
Most people don’t need a lot to do with the payments when they file returns in 2020. Payments “will not reduce your refund or increase the amount you have to pay when filing tax return for Federal income tax for the year 2020”, — stated in the message the IRS.
However, the Agency urges taxpayers to keep a notice stating the amount of payment, the manner of its implementation and other details that can be useful. In particular, some taxpayers can qualify for a loan that exceeds the amount of their incentive payment on the basis of lower income or other factors — and, thus, may require a difference in the next year.
While the payment incentives are not taxed, unemployment benefits are taxed. Keep this in mind if you have recently joined the millions of Americans applying for unemployment benefits for the first time in many years.
A break for older investors
The IRS decided that any elderly investors who have already taken the required minimum distribution, or RMD this year from certain retirement accounts, can transfer money back to the same or similar account. This may reduce the current tax account of the person and to allow them to recover their investment portfolios, as such withdrawals are usually taxed.
According to the new law the money RMD can be returned to your retirement account free of taxes until August 31.
This change mainly relates to people who withdrew money in the early years, long before there were problems due to the coronavirus. It updates the position of the CARES Act, which allows taxpayers to skip your regular payments RMD this year, if they have not made them. This is done to alleviate the financial impact of the pandemic.