Dear Clients and Friends:
Whew! Much has happened in the area of tax updates since our previous E-BLAST. The changes were coming fast and furious so we decided to wait until after things calmed down to put together this summary of issues that have the most importance to individuals and small businesses.
First
, income tax deadlines, both for filing and payments, have, for the most part, been extended from April 15 to July 15. At the federal level, where at first there was a dollar cap on what amount could be delayed without penalty or interest, there now is no cap at all. At the Commonwealth of Kentucky level, while the same deadlines have been extended, and penalties are eliminated thru July 15 as well, the delayed tax will still carry interest from April 15 because current state law does not allow for abatement of interest. The Kentucky Society of CPAs and other organizations are working with the legislature to get this changed, so stay tuned. Indiana has also extended filing and payment deadlines for its income tax returns and Ohio has indicated it is going to follow the federal approach as well. These rules apply to first quarter 2020 estimates as well. The Louisville Metro Revenue Commission has extended the filing and payment dates to July 15 for the Occupational Tax, but did not address other returns or interest/penalty abatement. Other city and county localities are expected to follow suit.
Second
, while income taxes are covered in the preceding paragraph, other taxes are not covered-yet. For now, the federal forms and payments for all other taxes are still due on their original dates. At the federal level, for example, Foundation returns, Form 990, for calendar year entities, are still due on May 15. At the Kentucky level, for example, sales tax returns and unemployment tax returns are still due on the 20th and last day of April. We are expecting further announcements from Kentucky and other states. If you have a question about your particular state, please reach out to us and we will endeavor to get you more specific information.
Third
, along with the delay in filing tax returns, there is also a permitted delay to July 15 in making IRA and HSA contributions for 2019. As a side note, with the markets having taken such a huge hit, now might be a good time to consider a rollover from your traditional IRA to a ROTH IRA. While taxes would be due currently on the amount rolled over, all growth when the markets turn around will be tax free forever. If you would like to discuss this strategy further, please give us a call and let us explain it in detail using your personal financial situation.
Fourth
, there is no delay provided for the 2nd Quarter estimated tax payments, which are due June 15, but we expect that, too, will change because of quarantines and business closures.
Fifth
, there is no word yet on what the extended deadline will be for extension requests filed by the new July 15 deadline. In normal times, the extended deadline would be October 15.
That's it for now.
Stay well.
