Economic Impact Payments (EIPs) are rolling out beginning this week!
Remember - for the majority of Americans who fall under the income thresholds, nothing will need to be done to receive the money. If an individual return was filed in 2019 or 2018, or social security benefits are received, Treasury will use that data to calculate stimulus amounts and either send payments via direct deposit or physical check to a last known address.
For those who have no filing requirement and are not on Social Security, the IRS created a portal to provide information so that the EIPs can be sent. Social Security recipients with qualifying children under age 17 who haven’t filed in 2019 or 2018 should also visit the portal to enter such information to receive $500 per child payments.
The IRS will first begin sending cash to those who have provided direct deposit banking information on their last filed tax return or for receiving Social Security benefits. If no banking info was provided previously, a separate portal will go live at the end of the week to allow taxpayers to enter direct deposit data, but updating will only work if a payment hasn’t already been sent (presumably in this case by mail). Use the “Get My Payment” app when it’s available soon to update direct deposit plus check payment status.
Make sure to update your address if you’ve moved, especially if you’ve not provided direct deposit info and will be receiving a physical check.
The Coronavirus-Caused 529 Plan Tax Risk You Can’t Ignore – Kiplinger. “With the coronavirus canceling college classes, you could be due a refund. But if you used 529 plan withdrawals to pay for tuition or room and board, you could be hit with a tax bill if you don't [recontribute those funds] within 60 days."
Related: Planning in a Time of Uncertainty: How COVID-19 is Affecting You Financially
Option to Change §163(j) Elections for Real Estate and Farming Businesses for CARES Act Changes Issued by IRS – Ed Zollars, Current Federal Tax Developments. “Some taxpayers who elected to be ‘electing real property trades or businesses’ based on the provisions of §163(j) prior to amendment by the CARES Act likely regretted their decisions once the Act retroactively changed the limit from 30% of adjusted taxable income to 50% of adjusted taxable income temporarily. The IRS is now giving those taxpayers a chance to undo that election based on guidance in Revenue Procedure 2020-22.”
New York FY 2021 Budget Bill Decouples From CARES Act Taxpayer Relief Provisions – Aruna Chittiappa & Marc Simonetti – Pillsbury SeeSalt Blog. “As a result, New York taxpayers will not receive the benefit of the CARES Act relief provisions for New York tax purposes.”
Related: State and Local Responses to the COVID-19 Pandemic
Legislating During Pandemics: Beware! – Reuven S. Avi-Yonah, TaxNotes ($). “If history has a lesson, we should be careful in assuming that tax breaks enacted during pandemics are temporary.”
Pandemic Disruptions Could Throw Tax Agreements into Limbo – Hamza Ali, BloombergTax. “Companies forced to change their business structures in the wake of the coronavirus pandemic may find it harder to renegotiate their agreements with tax authorities, potentially opening them up to future disputes and audits.”
Guidance on NOL carryback and tentative carryback adjustments – Sally P. Schreiber, Journal of Accountancy. “The IRS is granting a six-month extension of time to file Form 1045 or Form 1139 for taxpayers that have an NOL that arose in a tax year that began during calendar year 2018 and that ended on or before June 30, 2019.”
IRS Publishes FAQ On Payroll Tax Deferral; Provides More Immediate Cash To Businesses – Tony Nitti, Forbes. “The FAQ makes clear that a business that applies for a PPP loan may nevertheless defer the employer’s share of Social Security tax until a decision has been reached by the lender as to whether forgiveness will be permitted.”
Related: Employer Payroll Tax Deferral FAQ
Unentertaining Business Meals and Entertaining Employee Meetings – Libin Zhang, TaxNotes ($). “Three types of entertainment expenses were 50 percent deductible under prior law but have become 100 percent deductible under the TCJA.”
Related: Snack Attack: IRS Explains Business Meals
Tax Trivia
What is the highest marginal income tax rate in history?
Think your taxes are high now? In 1944 and 1945 the top marginal tax rate rose to 94%! Check out all the historical rates here.
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