Hands down, this has been the most unusual tax season in my 28-season career!  Normally it would now be one week and counting to the end, but not so this year.  Here are a few quick notes about important changes and planning opportunities brought about because of the pandemic.

2019 Tax Returns:  July 15 is the new April 15. You can wait three extra months to file your 2019 return and pay any balance due without interest or penalty, no extension needed.  Ohio and most cities have followed suit.  Ditto for most other states, but check your local department of revenue for updates.

2020 Estimated Tax:  If you pay quarterly estimated taxes, bear in mind that at this time, only the first quarter federal estimate has been pushed back to July 15^th.  This leaves an awkward situation where your second quarter estimate is due one month before your first quarter estimate.  I expect we’ll see another IRS announcement on that too, but nothing yet.  Ohio and most cities have pushed back both the first and second quarter estimate due dates to July 15^th.

IRA Contributions:  You have until July 15^th to make 2019 IRA contributions.  If you are eligible to deduct a traditional IRA contribution, doing so would reduce your AGI, and potentially increase your stimulus rebate amount if you’re over the $75,000/$150,000 AGI limits (single & separate vs. joint returns) for the full rebate.  If you already filed your 2019 return, you still have until July 15^th, but would need to amend your return to claim any additional deduction for a Traditional contribution (not for a Roth or non-deductible traditional contribution).  We don’t know for sure, but we suspect an amended return won’t change your rebate if you didn’t get the full amount based on the original, but this is still a good long-term savings strategy.

HSA Contributions:  Just like IRAs, you now have until July 15^th make additional contributions if you have an HSA-eligible health insurance plan and didn’t already contribute the maximum amount allowed for tax year 2019.  These too reduce your AGI; if a lower AGI would increase your rebate, here’s another good reason to put more in if you can.  If you’ve already filed your 2019 return, you’ll need to amend to reflect the deduction.  As with the IRA, we don’t know that an amended return will help in terms of your rebate, but there are many other advantages to maximizing this contribution if you can.

RMDs:  For those over 70, and for those receiving inherited IRAs from a non-spouse, required minimum distributions have been waived for this year.  If you are set up for automatic withdrawals and want to postpone or skip this year’s RMD, contact your institution to make arrangements.  If you already took your distribution and would like to put it back, there are a couple ways to do that; again, contact your institution for details.

 Opportunities:  If your income is going to be lower this year, there may be some strategies you can use to take advantage of the situation.  Don’t take these as advice, they will depend on your specific situation, and are just “idea starters.”  But for example, if you’re retired, this might be a good year to take more out of your IRA at a lower tax cost, and invest while the market is down to realize greater capital gains as it rebounds.  (Capital gains will probably be taxed a lower rate when you cash them in vs. the higher tax rate on IRA distributions.)  Or perhaps do a rollover from a traditional IRA to a Roth, when both the value AND your taxable income are lower than usual.  How about harvesting capital gains in your portfolio (yes, they may still be there) at a lower tax rate?  If you have a business or rental property, a number of other strategies may be possible as well.  Call us to schedule a phone appointment if you’d like to discuss what might work well in your particular situation.

Our Schedule:  Our normal tax return processing time has slowed considerably this year for a number of reasons.  Since the pandemic hit, we haven’t had our normal full team complement due to various personal situations.  We have had to divert enormous time and attention to the CARES Act and other urgent federal and state developments, especially to help our business clients adapt.  And as we do finish returns, it takes significantly longer to make delivery arrangements due to Ohio’s stay at home order.

Throughout these most unusual of times, we are working diligently to serve you.  We appreciate your patience, and will continue to complete tax returns as quickly as we can, given the limitations on our team and the time needed to meet the most urgent needs.  As we noted above, there is no need to file an extension if we don’t complete your returns by April 15th, and we will continue working on them afterward.  If you have particular questions or concerns about the timing (or anything else), please get in touch.

As many of you know, we usually close the office for a few days after April 15^th.  Even though the deadline has been pushed back this year, our team is still feeling a lot of strain from the situation we’re all dealing with, so we are going to take a break and close as usual on Thursday and Friday, April 16^th and 17^th.   We will resume normal hours on Monday April 20^th.

A final note to small businesses: We are here to help you not only survive through this partial shut down, but to thrive when things start to ramp up again.  As hard as the current circumstances are, there are opportunities here for those who will look for them.  As coach John Wooden once said, “Things turn out best for those who make the best of how things turn out.”  Contact us if you’d like to explore how we can help you come out of this even stronger and more successful than you were before.

We are closely monitoring developments, emerging details and planning opportunities surrounding the current pandemic, and post frequent updates on our blog as we learn more.  Check back often, or follow us on LinkedIn, Facebook or Twitter for alerts.