As I am sure most of you have heard, the US Treasury changed the Federal filing, AND payment date, for 2019 income tax returns to July 15, 2020. That would seem to give some breathing room, but the Commonwealth of Virginia is saying, “Not so fast!”. There are several factors at play, which complicate the filing deadlines:
We are proceeding as usual and would like everyone to help us in that regard by getting us your information ASAP.
The IRS has given some further guidelines on a number of issues that affect 2019, including contributions to IRAs and HSAs.
Those deadlines have been extended to the date your returns is filed, OR July 15, 2020, whichever date comes first.
Please see the list of 24 FAQ published by the IRS, here.
The coronavirus relief bill signed by the President, on March 18, 2020, provides several payroll tax credits for employers who provide paid sick leave or family or medical leave for their employees who miss work for various coronavirus-related reasons. In general, the employer will be allowed a payroll tax credit for 100% of the wages paid to the employee who qualifies. There are limitations and record keeping requirements. Please contact us directly via email or telephone for more detailed analysis if this applies to you.
There is a TON of incorrect information in the press about how the IRS will be handling the filing deadline for 2019 income tax returns. The IRS finally clarified when they issued IRS Notice 2020-17 late Wednesday, March 18th.
First and foremost, the deadline to FILE your return has NOT been extended. The deadline continues to be April 15, 2020. As you have been able to do in the past, you have the right to request an automatic 6 month extension of time to file your 2019 income tax return, but it MUST be done by you or your tax preparer.
What the IRS has granted is additional time to PAY (without being subject to interest and penalties) your tax balance due on your return from April 15, 2020 to July 15, 2020. For example, if you file your return by April 15, 2020 with a balance due of $1,500 that amount does not need to be paid until July 15, 2020.
This grace period for payments also applies to extended returns. A common misconception is that extensions also extend the time to pay your tax due, but the recent notice from the IRS has stated that if you project a balance due on your 2019 extension filed by April 15, 2020, you do not have to pay that amount until July 15, 2020.
The notice has also delayed the 1st quarter 2020 estimated tax payment originally due April 15, 2020. This 1st quarter estimated tax payment can also be deferred (penalty free) until July 15, 2020. Absent new legislation, all subsequent 2020 quarterly estimated tax payments will be due on the normal due dates of June 15 and September 15 of 2020 and January 15, 2021.
Eligible IRA Contributions will still need to be made by April 15, 2020 to be deductible on your 2019 income tax returns.
Virginia and all other states except Maryland and California have not changed their filing deadline so Virginia is still May 1, 2020. However, states typically pass rules adapting to the federal changes soon after a federal change. We will let you know if/when Virginia changes their filing deadline.
So as you can see, not much has really changed.
We encourage all clients to proceed as usual to file their 2019 income tax returns, and there will be a small benefit if you have a balance due. Returns with an overpayment will really not be affected by this notice, but getting your refund back soon may be helpful to your cash flow.
All the other procedures that we put in place to protect clients, H&E staff, their families and the population in general since the COVID-19 outbreak are still in place and we appreciate that everyone so far has respected those procedures. See the post below for details.
Thanks again for your understanding in these extraordinary times.
1. All meetings will be canceled and no future meetings will be scheduled including document drop-off. Communication should be via email or telephone.
2. All client data for income tax return preparation should be sent to us electronically. We have a secure portal to easily send documents to us. Documents may be uploaded directly to your tax preparer, via our File Exchange.
3. If for some reason you just cannot send documents electronically, we will accept documents on Fridays from 2:00 to 4:00 only. The documents will be dropped in a bin rather than coming inside. We will be monitoring the bin constantly to ensure security of documents.
4. The IRS is currently considering extending the 2019 income tax filing deadline, but no announcement has been made yet. In light of this outbreak, we may be forced to extend the filing of your returns. Extensions only extend the time to file a return, not to pay, but we fully expect that at a minimum the IRS will waive penalties for payments after April 15th in light of this outbreak.
5. We expect that a number of organizations will move toward working remotely so many of you will have extra time on your hands. This is the perfect time to accumulate your 2019 tax data and send to us immediately.
If you have any questions, please do not hesitate to email or call.
Thanks for your understanding in this extraordinary circumstance.
Hampton & Everett is different from most CPA firms. In fact, we are much more than typical CPAs. We are business developers, financial consultants, personal advisors and trusted friends. In its most simple form, we assist our clients in order to maximize their personal and business financial well-being.
The H&E team is made up of personable individuals with ties to our community and wide interests outside the profession. Whether it be business, politics, sports, education or raising children, your interests are our interests.
H&E distinguishes itself from the competition by providing client service over and above accounting and tax service. H&E knows and understands its clients and is in communication with them frequently throughout the year, not just during income tax season or the reporting period. We return telephone calls and e-mails promptly and remain available to our clients even when we are outside the office. We understand the importance of timely service and pride ourselves on a very low extension rate.
Our objective is to provide business owners and individuals with personalized tax, accounting and advice to assist in reaching their financial goals. While some only look to their CPA to provide basic income tax compliance, our services go beyond that. Our services are designed for those clients who need to carefully prepare plans to anticipate their tax position as it affects their overall goals. These clients want advice on how best to structure their business and investments. They rely on and trust H&E’s personal advisory services. These are the clients best served by H&E.