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Tax Updates for the End of September

Tax Relief For Disaster Victims

The IRS has provided tax relief to victims of the Oregon wildfires that began on September 7, as well as those affected by Hurricane Sally on September 14. Taxpayers in these FEMA-designated areas now have until January 15, 2021 to file returns and make any payments that were due after the September 7 or 14 date. This means those who filed extensions to file their 2019 taxes by October 15 now have until the January deadline to file. Updated relief information can always be found at the IRS’ disaster relief page.

100% Depreciation Rules Finalized

The IRS has issued final guidelines regarding the implementation of the 100% additional first year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service. This deduction was created by the Tax Cuts and Jobs Act (TCJA) in 2017 and applies to depreciable business assets with an expected recovery of 20 years or less, such as computers, machinery, furniture, and appliances. Rules for used equipment and self-constructed components were also included.

Non-Filers: Do You Qualify For Economic Impact Payments?

The IRS has released a state-by-state breakdown of the number of people they’re attempting to contact this month, to encourage them to see if they’re eligible to receive an Economic Impact Payment (EIP) , including more than 350,000 in the Carolinas. Those who do not usually have to file a tax return and haven’t received an EIP can check their eligibility and register to receive the payment. The due date for registration is October 15, 2020. The IRS is attempting to send letters to over 8 million potentially eligible individuals.

IRS Reminds Extension Filers: Due Date Approaches

Taxpayers who were granted an extension on filing their 2019 taxes have until October 15, 2020, to file their tax return. There are convenient electronic filing options available, as well as direct deposit for refunds and multiple options for scheduling and making electronic tax payments.

Tax Updates September 10

Interest Rates Remain The Same

The IRS has made the decision to keep the same interest rate for the fourth quarter of 2020. Each quarter, the IRS sets the interest rates charged or paid on over- and underpayment. For taxpayers (other than corporations), the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Other rates are as follows:

  • 3% for overpayments (2% in the case of a corporation)
  • 5% for the portion of a corporate overpayment exceeding $10,000
  • 3% percent for underpayments
  • 5% percent for large corporate underpayments

Final BEAT Regulations Issued

The Tax Cuts and Jobs Act (TCJA) added a new tax on large U.S. corporations that make deductible payments to related foreign parties, called the base erosion and anti-abuse tax (BEAT). The IRS has issued final regulations providing detailed guidance regarding how to compute certain BEAT calculations. They also contain rules permitting taxpayers to waive deductions for purposes of the BEAT, and additional guidance regarding partnerships and anti-abuse rules.

Temporary Digital Signatures Allowed

The IRS has released a list of tax forms on which they are allowing digital signatures. This is a temporary measure, in place until December 31, 2020, intended to help protect the health of taxpayers and tax professionals. These forms have to be printed and mailed, but the digital signatures will enable the forms to be filled and filed without contact between taxpayer and tax preparer, and in a timely manner. The IRS will continue to monitor this temporary option and determine if further measures are necessary.

Third Quarter Tax Payments Due September 15

The IRS reminds taxpayers that third quarter tax payments are due September 15. This applies to anyone not subject to payroll tax withholding like self-employed or gig workers, investors, recipients of alimony, retirees, and others. Taxes are “pay as you go,” and there are penalties for late payment or underpayment of taxes. Due dates for disaster victims have been delayed.

Tax Updates for the End of June

It’s that time again, where we summarize all the goings on from the IRS. Here is your end of June tax updates.

Multiple Payments Due July 15

The IRS is reminding taxpayers that tax liabilities from 2019 are due July 15, 2020, as well as estimated tax payments from 2020 typically due April 15 and June 15. These extensions were part of the coronavirus tax relief. Additionally, taxpayers who live and work abroad have had their usual June 15 filing date extended to July 15. Payment options and instructions are available. All coronavirus affected payment and filing deadlines can be found here.

Tax Relief For Southern Storm Victims

The due date for filing tax returns and making estimated payments has been extended to October 15, 2020 for taxpayers and businesses affected by storms last April. These FEMA-designated disaster areas include parts of Mississippi, Tennessee, and South Carolina who experienced storms, flooding, and/or tornadoes. Affected taxpayers will also have until October 15 to make 2019 IRA contributions, and the same deadline also applies to estimated tax payments for the first two quarters of 2020 that were due on July 15, and the third quarter estimated tax payment normally due on September 15. More information can be found on the IRS’ disaster relief page

Economic Impact Payments Belong To Recipients

Following concerns that people and businesses may be taking advantage of vulnerable populations, the IRS has issued a reminder that economic impact payments belong to the recipients of the payments, and not a nursing home or other organization providing care to the recipients. Also, these payments generally do not count as a resource or income for purposes of determining eligibility for Medicaid and other federal programs. The Social Security Administration has further information on how these payments may be handled.

COVID-19 Tax Relief For Retirement Distributions

The IRS has expanded the definition of “qualified individuals” who may take advantage of CARES Act provisions regarding retirement plan distributions and loans. For instance, a coronavirus-related distribution is not subject to the 10% additional tax that otherwise generally applies to distributions made before an individual reaches age 59 ½. Qualified individuals are those affected by COVID-19, whether due to contracting the virus or its effect on their employment. Notice 2020-50 provides the details.

Tax Updates April 30

SSI And VA Recipients To Receive Automatic Payments

The IRS and Treasury, in partnership with the Social Security Administration and Department of Veterans Affairs have announced that recipients of Supplemental Security Income and VA benefits will automatically receive Economic Impact Payments. Most recipients need to take no action to receive payment, however, for those who have dependents age 16 or younger and did not file a tax return for 2018 or 2019, a special tool has been set up to register for the additional dependent payment. May 5 is the deadline to register for the additional payment.

Guidance For Cross-Border Travel Disruptions

The Treasury Department and IRS have issued guidance for individuals and businesses who have been impacted by travel disruptions caused by COVID-19 and the response. The guidance addresses situations where 60 consecutive days of residence would generally indicate tax residency, and explains certain income exclusions which will not be impacted as a result of days spent away from a foreign country.

Guidance For UBTI “Silo” Rules

Guidance has been issued for tax-exempt organizations that are subject to the unrelated business income tax with more than one unrelated trade or business on how to calculate their unrelated business taxable income (UBTI). The Tax Cuts and Jobs Act (TCJA) requires tax-exempt organizations subject to the UBTI tax to compute UBTI separately for each trade or business (referred to as a “silo”).

“Get My Payment” Program Enhanced

The IRS has significantly enhanced the “Get My Payment” online application this weekend. The changes are designed to help taxpayers have an improved and smoother experience, including access to adding direct deposit information. Taxpayers can check the status of their payment and if necessary, can add direct deposit information. Further improvements and enhancements will be ongoing.