Tax Filing News Update, Extended Deadline For Retirement Contributions, And More
Updated: Jul 6, 2020
A Round-Up of the Coronavirus Stimulus Package
Today, on March 27, 2020, President Trump signed a $2 trillion economic relief plan into law. Its components include payments to individuals, expanded unemployment coverage, small business relief, student loan repayment changes, IRA withdrawal requirement adjustments, and more. We are following the news closely, and our industry is working to understand the financial implications and planning opportunities of this package. We plan to send out a summary on what this stimulus package means for you - and all Americans - within the next week.
Tax Filing Deadline Now Also Extended to July 15, 2020
In Notice 2020-18 (PDF), the Treasury Department and the Internal Revenue Service (IRS) announced special Federal income tax return filing and payment relief in response to the ongoing COVID-19 emergency.
Both the Federal filing and payment deadline have now been extended by 90 days to July 15, 2020. Taxpayers can also defer federal income tax payments due on April 15 to July 15, without penalties and interest, regardless of the amount owed.
Ohio announced this week that it will extend the state income tax filing date to July 15th. Ohio's filing extension applies to school district income tax as well.
Does the extension apply to estimated tax payments? Yes! The payment deferment also applies to the 2020 first quarter estimated tax payment for all taxpayers, including individuals, trusts, estates, and corporations. This extension applies to the federal, Ohio, and Ohio school district estimated tax payment deadline.
Has the deadline to make 2019 retirement contributions also been extended? Yes! Contributions can be made to your IRA, Roth IRA, Individual 401(k), Individual Roth 401(k), and SEP IRA for 2019 up until July 15. This extension also applies to making 2019 H.S.A. contributions.
Can we file now and still wait to pay until July 15? Yes! Our tax software is designed to automatically initiate tax payments on April 15 once we file your return. If you would prefer to wait until July 15, please let us know so that we can manually override the system and designate a July 15 tax payment date.
If I already filed my return, am I still forced to pay my tax bill on April 15? No, but you do need to take action to prevent the payment from being withdrawn from your bank account. If you wish to change your payment date, you must call the IRS 24-hour call line at 888-353-4537, and ask them to cancel the payment and request a new payment method. They will ask for your:
Whether this is regarding an individual or business tax return
Scheduled date of direct debit. If your return has already been filed, the scheduled date is 4/15.
Routing and account number
The IRS will then provide you with an acknowledgement number for the cancellation. If you need assistance with this, please don't hesitate to let us know!
More FAQs about the tax deadline extensions are answered at this link.
NorthAvenue continues to track to the April 15 tax deadline in order to complete returns as efficiently as possible. We plan to do our best to compete your tax return as close to the original deadline as we are able. However, due to the effect of the pandemic on our workplace and increased concerns/questions from our clients, we may take advantage of the change in filing deadline for a handful of returns. If this applies to your return, we will let you know.
US Market Historical Returns Following Sharp Downturns
We continue to experience market volatility, and it's no question that sudden market downturns can be unsettling. But historically, US equity returns following sharp downturns have been positive.
Read this short article from Dimensional Fund Advisors to learn more.
A Message of Support and Encouragement
We have all been getting bombarded with COVID-19 updates and media coverage. It has certainly been overwhelming at times.
Self-isolating and social distancing are extremely important precautions during this critical time. However, we believe it is also important to be mindful of the risks of isolation, so that we can help mitigate their impacts. We are emotional beings, and it is very natural to be fearful in times like these. Behavioral finance teaches us that we often act irrationally out of fear, especially when it comes to money. Therefore, we believe we need a community around us to encourage and support each other. We want to be part of that community with you and strive for solutions.
“Alone, we can do so little. Together, we can do so much.” ~ Helen Keller
With full acknowledgement of the seriousness of this situation, we also want to be a source of encouragement and positive reinforcement. History has shown us that we are forgetful people, which is why we are at our best when we are in a community of people working together for the good of each other. Believe it or not, we have had several pandemics in the last 80 years, and although every situation is different, they hold clues and provide precedent that we will get through this and ultimately thrive again. Both the 1957 Flu (H2N2 virus) and the 1968 Flu (H3N2 virus) killed more than 1 million people globally, and the more recent 2009 H1N1 virus killed several hundred thousand people. Even though we didn’t have social media hysteria back then, the impact was severe. But, markets recovered.
Our thoughts are with all those - you and your loved ones included - who are directly impacted by the virus. We also want to remind you that we are here for you. We encourage you to take care of your mental health and practice self-care during this time.
Let's continue to encourage our neighbors and together we will get through this.