COVID-19: Important Updates & Reminders
Yes, our office remains open, although some of us are working from home. We are not having in-person client meetings during this “COVID isolation time.” However, we continue communicating with our clients by phone, email and virtual meetings via Zoom or other platforms. For our tax preparation clients, our turn-around time is taking a little longer than normal, but rest assured your returns continue being processed in a careful and diligent manner.
For any clients needing to bring any tax or investment documents to our office, we have a mail slot in the exterior door as well as a table in the foyer where items can be left.
Here are some updates and changes regarding tax filings, IRA contributions and distributions, as well as help for individuals and small businesses during this stressful time.
Tax Filings - Federal and State
The IRS and North Carolina have changed the normal filing and payment due dates for tax returns.
- 2019 Tax Return Filing Date - The filing due date for Federal and NC returns is automatically extended from 4/15/20 to 7/15/20. Of course, we encourage you to gather all your documents and file as soon as possible, because you don’t want to be worrying with taxes when warm spring weather is beckoning you to come outside.
- 2019 Tax Return Payment Date – If you owe money with your 2019 Federal or NC return, the payment date is also automatically extended from 4/15/20 to 7/15/20. There will be no penalties or interest on Federal payments made by 7/15/20 and no penalties for NC payments made by 7/15/20. Note that interest still currently applies for NC payments made after 4/15/20, but we anticipate legislation to waive interest.
- 2020 Estimated Tax Payments –Normally the first quarterly estimated payment would be due by 4/15/20 and the second by 6/15/20. The IRS has extended the due date for both these estimates to 7/15/20. NC has not yet altered their due dates, but we anticipate legislation to change to 7/15/20 for both the NC estimates.
IRA Contributions and Distributions
- 2019 IRA Contributions - The deadline for 2019 IRA contributions has been extended from 4/15/20 to 7/15/20.
- 2020 IRA required minimum distributions (RMDs) have been suspended for the 2020 tax year. If you have already received a distribution for 2020, it is possible to reverse it. Please contact us for more information.
- Recovery Rebates – Payments up to $1,200 for singles and $2,400 for couples, plus an additional $500 per dependent child. These payments phase down as income exceeds $75,000 for singles and $150,000 for couples and are not available at all for singles earning more than $99,000 or couples earning more than $198,000.
- Paycheck Protection Program – Small businesses, including self-employed individuals can receive a two-year loan, which is potentially forgivable. The maximum loan amount is equal to 2.5 times average monthly payroll costs.
- Economic Injury Disaster Loans – A longer-term small business loan available from the Small Business Administration.
- Penalties on Retirement Distributions – Normally a 10% penalty applies when someone under age 59 ½ takes distributions from a 401(k) or IRA. In 2020, a “qualified individual” experiencing a financial hardship can take up to $100,000 from a retirement plan without the 10% early distribution penalty. Taxes on the distribution can be spread over 3 years and avoided entirely if the distribution is repaid within 3 years.
Markets & Economy
We are all aware of the damage COVID-19 unleashed upon the global economy and markets. Times like these remind us of the importance of a sound long-term financial plan, proper asset allocation, and diversification. We continue monitoring our client’s portfolios, with an eye both to risk and opportunity.
In Tolkien’s The Lord of the Rings, the hobbit Frodo laments to Gandalf about his forbidding situation and says, “I wish it need not have happened in my time.” Gandalf answers, “So do I, and so do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given us.”
A reminder to all of us not fret over things beyond our control, but to focus instead on what we can control and spend our time wisely.
Please contact us if you want to discuss your personal situation.
Gerald A. Townsend, CPA/PFS/ABV, CFP®, CFA®, CMT
The opinions expressed are those of the Townsend Asset Management team. The opinions referenced are as of the date of publication and are subject to change due to changes in market or economic conditions and may not necessarily come to pass. Forward looking statements cannot be guaranteed. Past performance is not indicative of future results. This material is not financial advice or a recommendation to buy or sell a particular security or product. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Townsend Asset Management Corp. is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the ﬁrm can be found in its Form ADV Part 2, which is available upon request. TAM-20-26.