COVID-19 Government & Tax Updates

We just finished one of the strangest months the world has ever recorded. Events were canceled, large gatherings were discouraged and then even prohibited. Businesses and schools have had to adjust swiftly. Teachers and kids are doing distance learning from home. Restaurants are offering curbside pickup and delivery only. I have heard stories of personal service businesses, music teachers, karate classes, and physical trainers that are finding new ways of meeting, teaching, and training clients through live video. Sadly many businesses were not prepared for this kind of change or have not adapted quickly enough, and their businesses have closed. As part of our regulatory compliance, HSC has worked on our business continuity plan over the last couple of years. We all have the capability of continuing our work from any location with internet service. We at HSC have been calling and video chatting with our clients as much and as often as possible over the last few weeks. Please do not hesitate to reach out to us if you have any concerns, questions, or needs.

Most people have been watching the spread of COVID-19 around the world and wondering if they can find toilet paper at the store. Meanwhile, local, state, and federal government agencies have been working hard to protect employees, health care workers, and the public. Some of those changes have made headlines, while others may have been overlooked with the constant barrage of new information. Below is a bullet point list of updates that we at HSC would like to share with you:

DMV & Travel Update

• State Drivers Licenses that have expired during the shutdown are considered valid until the DMVs re-open.
• The Dept. of Homeland Security postponed the REAL ID compliance date to October 2021.

Federal Student Loan Update

• The Federal student loan interest rate was set to 0% on March 13th, lasting until Sept 30th.
• Borrower’s payments are also now suspended until Sept. 30th, 2020.
• Borrowers may request reinstatement of payments, all of which will be applied to the loan principal.

IRS Tax Deadline

• The Federal Tax deadline has been extended to July 15th.
• The due date for tax payments was also extended to July 15th.
• This is an automatic “extension” – don’t let July 15th go by without either filing or paying your estimated tax bill and filing for an extension to October 15th.

Virginia Tax Deadline

• Beware – Virginia tax filing deadline is still May 1st, at which point interest will start accruing on any unpaid tax liability.
• On June 1st, Virginia says it will start accruing penalties as well on any unpaid tax balance.

Social Security Office

• On March 17th the Social Security field offices were closed indefinitely.
• Phone, mail, and online are still available, with online being the preferred method of contact: ssa.gov/onlineservices or 1-800-772-1213
• Some SS beneficiaries have received scam letters through the mail or phone calls indicating that benefits may be suspended or possibly increased due to the coronavirus. They are asking for personally identifiable information to use for identity theft. These are scams! Please use caution if you receive a letter or call like this. No benefits are being suspended or increased at this time, according to the SSA.

IRA & HSA Deadlines

• For 2020, individuals have until July 15th to make their 2019 IRA & HSA contributions.
• Any excess 2019 contributions still need to be withdrawn by April 15th.

Stimulus Checks

• Eligible individuals will receive a refundable tax credit against their 2020 taxable income equal to $1,200 ($2,400 for joint filers) plus $500 per qualifying child under age 17.
• The credit begins to phase out if the individual’s AGI exceeds $75,000 ($150,000 for joint filers and $112,500 for head of household filers).
• The credit will be automatically advanced to eligible individuals based on the individual’s most recent income tax filing (2018 or 2019).
• Individuals who have not filed a tax return in 2018 or 2019 may still receive a check based on their social security benefit or equivalent railroad retirement benefit.
• If you were not eligible based on 2018 and 2019 AGI, you can still qualify for the rebate when you file your 2020 income tax return.
• If you get a rebate check, but your 2020 AGI puts you in the phase-out range, you will not have to pay back the rebate.

Retirement Accounts

• The 10% Early Withdrawal penalty is waived for distributions up to $100,000 from qualified retirement plan accounts in 2020.
• Taxable amounts from such distributions can be included in income over 3 years.
• Taxpayers may recontribute the funds to an eligible retirement plan within 3 years without regard to that year’s cap.
• For the calendar year 2020, all required minimum distributions have been waived. This includes Qualified Retirement Plans, IRAs and Inherited IRAs.
• What if I already took out my RMD, can I put it back in? As usual, it depends. Until further clarification comes out, you still have the 60-day window to do a rollover.

Above the Line Deduction for Charitable Contributions

• Individuals who do not itemize but use the standard deduction may take a qualified charitable contribution deduction of up to $300.
• For those who itemize, the AGI limitation on charitable contributions is removed, meaning you can now deduct cash donations up to 100% of your AGI. Previously, cash contributions were limited to 60% of your AGI.

If you read to this point, you are a brave soul. And if you are looking for a new line of work, I know a few tax preparers that could use some extra help with all that is going on.

In all seriousness, please call if you have any questions or think you might benefit from any of the above items and want to talk about it.

We hope you all are staying safe, healthy, grounded, and grateful during this time!