Tax Dates Extended

). The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.

Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.  Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses who need additional time must file Form 7004.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days. 

“Even with the filing deadline extended, we urge taxpayers who are owed refunds to file as soon as possible and file electronically,” said IRS Commissioner Chuck Rettig. “Filing electronically with direct deposit is the quickest way to get refunds. Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds. As a federal agency vital to the overall operations of our country, we ask for your personal support, your understanding – and your patience. I’m incredibly proud of our employees as we navigate through numerous different challenges in this very rapidly changing environment.”

The IRS has established a special web page to help taxpayers, businesses and others affected by the coronavirus. The web page will be updated as new information becomes available

BTW IRA contributions are also extended to July 15.....

Where's my Refund?

People love getting tax refunds even though many don’t realize that they have in fact made the IRS and interest free loan. I heard a car dealership announce a program to give taxpayers double their refund against a new car. With that kind of logic perhaps taxpayers are right in making even larger loans to their favorite government agency. But let’s be clear. The most advantageous position to be in at tax filing time is receiving no refund at all. Keep in mind that there is a penalty for underestimating tax liability and that penalty will get automatically calculated by your tax preparation software. However, the money the taxpayer would have sent to IRS should be invested somewhere else. As a matter of fact IRS tries to process tax refunds within 21 days of the filing of a tax return. IRS will tell you that the best way to get that refund fast is to file electronically and choose direct deposit. For those anxious to find out the status of their refund the IRS has a tool @IRS.gov called “Where’s My Refund.” Taxpayers can use this tool if it’s been more than 21 days since the taxpayer filed electronically or six weeks since they mailed a paper return. Taxpayers can also use an automated telephone line at 800-829-1954 for the same information. Ordering an IRS tax transcript is not necessary and will not speed up the receipt of a refund.

IRA Changes

While you were focused on the impeachment proceedings Congress was busy passing the retirement SECURE act. Its way too long name is the Setting Every Community Up for Retirement Enhancement Act of 2019 which was signed into law on December 2019 and became effective January 1, 2020. This law makes it easier and less expensive for employers to administer pension plans. For employees it makes changes to how beneficiaries of an IRA will be treated. I am sure there will be a number of continuing education programs on the subject. One of the earliest is provided by the state bar association on January 24, 2020. But among the many changes perhaps the most substantial is requiring beneficiaries of IRAs to elect to receive payments from the inherited IRA over a period of 10 years. Previously a beneficiary was allowed to take distribution over their life expectancy which could be, of course, substantially longer. What this meant was IRS was denied the taxation of those proceeds inherited until beneficiaries received the funds. Those beneficiaries had a tax exempt vehicle in which to invest during their lifetimes. I believe for spouses a special rule continues to allow them to pour over any distribution from an inherited IRA into their own IRA for subsequent distribution not subject to the new 10 year rule. Attorneys who have been involved in estate planning where IRA and other pensions are substantial assets should consider a review of wills and trusts as they apply to this new law. Now practically speaking there may be a better plan. Here it is: Having reached a certain age myself I would like to suggest not being terribly worried about beneficiaries getting distributions from your IRA or other pension. It may be time for you to realize that unless you spend it yourself your beneficiaries will live much better than you do on those deliciously inherited funds even if they are taxable since they did not work a single day to obtain them as you did. So it may be time for you to meet with a therapist rather than a lawyer with regard to your own retirement planning. If you plan properly perhaps the best result is that your retirement plan will be bordering on empty when you go to the great beyond. That in essence solves the tax situation for your beneficiaries and may make your own time here a lot more enjoyable.