Covid-19 Stimulus Information

Dear Valued Clients,

 

These are uncertain times and you probably have questions regarding the stimulus package and recent changes related to tax filings.

 

The following April 15^th deadlines have been extended to July 15^th, 2020:

 

• Filing due date for 2019 individual income tax returns
• Payment due date for 2019 individual income tax returns
• 1^st quarter estimates for 2020 individual income tax
• Due date for 2019 IRA contributions
• Due date for 2019 HSA contributions
• Filing and payment due date for Arizona individual tax returns

 

Please note: Most states have also extended their payment and filing deadlines. If you have a question please check with us.

 

AZ Tax Credit Donations: The deadline for 2019 tax credit donations has NOT been extended.

 

 

Please see below for a summary of information related to:

 

• Stimulus payments for all adults and dependents (under the age of 17) within certain income thresholds.
• Required minimum distributions from retirement accounts.
• IRA distribution for those impacted by the virus.

 

Stimulus Payment Details by Filing Status:

 

• Single:
  • Amount of Stimulus Payment – $1,200, plus $500 for each dependent child under the age of 17.
  • AGI Requirements – Individuals with AGIs up to $75,000 are eligible for the full payment.
  • Phaseout – The payment amount is reduced by $5 for every $100 in income above $75,000.

 

• Married Filing Joint:
  • Amount of Stimulus Payment – $2,400, plus $500 for each dependent child under the age of 17.
  • AGI Requirements – Couples with AGIs up to $150,000 are eligible for the full payment.
  • Phaseout – The payment amount is reduced by $5 for every $100 in income above $150,000.

 

• Head of Household:
  • Amount of Stimulus Payment – $1,200, plus $500 for each dependent child under the age of 17.
  • AGI Requirements – Individuals with AGIs up to $112,500 are eligible for the full payment.
  • Phaseout – The payment amount is reduced by $5 for every $100 in income above $112,500.

 

Stimulus Payment Frequently Asked Questions:

 

• How will my eligibility for the stimulus payment be determined?
  • If you have already filed your 2019 return, your eligibility for the stimulus payment will be determined by your 2019 adjusted gross income (AGI).
  • If you have not yet filed your 2019 tax return, you eligibility for the stimulus payment will be determined by your 2018 adjusted gross income (AGI).

 

• What if I experience a change in income during 2020?
  • If you do not qualify for the payment based on your 2018 AGI or 2019 AGI, you may be still be eligible to receive a payment if you experience a decrease in income during 2020. If your 2020 AGI is below the thresholds designated below, you will receive your stimulus payment when filing your 2020 tax return.
  • If you experience an increase in income during 2020, you will not have to repay any portion of the stimulus payment you originally received.
• How will I receive my stimulus payment?
  • The IRS will deposit your stimulus payment directly into your bank account. The IRS will use the banking information provided on your 2019 return (or 2018 return if your 2019 return has not been filed).
  • If you did not provide any banking information on your return, the IRS will mail you a check.

 

 

IRA Distributions (To Be Finalized):

 

• Taxpayers experiencing virus related challenges may withdraw up to $100,000 (free of 10% early distribution penalty) from their IRAs, 401ks, and qualified trusts. Withdrawal amounts are taxable over 3 years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for 3 years without affecting retirement caps.
• Please note that we do not have final details in regards to qualifying for these virus related exceptions.

 

Required Minimum Distributions (RMD):

 

• For those taxpayers over the age of 70 ½ in 2019 or those who will reach the age of 72 in 2020, the RMD requirement is waived for 2020.