Since March, federal and state governments have engaged in a variety of methods designed to safeguard Americans’ health and financial security in the wake of the coronavirus pandemic. At any time, taxes have a direct impact on our lives, so it’s natural that some of the key provisions of the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act relate to taxation. Designed to assist states, medical providers, businesses and individuals, this legislation was signed into law on March 27, in the midst of what is usually income tax filing season.
Critical aspects of the CARES Act that have an effect on taxes include:
● Rebate payments — Much has been made of stimulus dollars that will be going directly to taxpayers. Not everyone will collect these payments, however, which begin to phase out for individuals with an annual income of at least $75,000 and jointly filing married couples whose combined income is $150,000 or more. The individual maximum payment is $1,200 and as much as $2,400 can be sent to a couple when the spouses file jointly. On top of that, an additional $500 can go to a household for each child 17 years of age or younger.
● Filing and payment extensions — Congress extended by three months the traditional April 15 deadline for the filing of federal income tax returns and the payment of amounts owed to the government. Originally, only the payment date was shifted, but now both deadlines are slated for July 15. That is also the date by which someone must apply for an extension, to October 15, if they need one.
● Payroll tax credits — Employers that do not take a Paycheck Protection Program loan, offered through the CARES Act, are eligible to take a credit on their payroll taxes through the end of 2020. This credit is offered to businesses that have been closed down due to government order or have seen a year-over-year drop of at last 50 percent of gross receipts in a given quarter. Within a quarter, the credit can total as much as $5,000.
Handling tax issues can be a challenge at any time, and especially during these perilous economic times, you don’t want to make a costly mistake. Consulting with an effective tax attorney will help you take advantage of programs that have been created or modified to address the issues you’re facing.