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June 2, 2020
IRS reminder: June 15 tax deadline postponed to July 15 for taxpayers who live and work abroad
WASHINGTON – The Internal Revenue Service today reminded people who live and work abroad that they have until Wednesday, July 15, 2020, to file their 2019 federal income tax return and pay any tax due. The usual deadline is June 15.
This extension was included in a wide range of Coronavirus-related relief announced in early April. The extension generally applies to all taxpayers who have an income tax filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020.
This means that anyone, including Americans who live and work abroad, nonresident aliens and foreign entities with a U.S. filing and payment requirement, have until July 15 to file their 2019 federal income tax return and pay any tax due. Visit IRS.gov/Coronavirus for details.
June 1, 2020
Travel Disruptions and the Foreign Earned Income Exclusion
Under Revenue Procedure 2020-27, U.S. individual taxpayers who worked abroad and planned to claim the “foreign earned income exclusion” to exclude a portion of their foreign source earned income are also offered relief. Any U.S. individual taxpayer who left his or her foreign country of residence on or after February 1, 2020, but before July 15, 2020, will still be treated as a “qualified individual” for purposes of the foreign earned income exclusion provided such person establishes a reasonable expectation that he or she would have otherwise met the eligibility requirements for claiming the foreign earned income inclusion. Residents of China may be eligible for relief even if they left as early as December 1, 2019.
April 1, 2020
No Tax Return Required for Social Security Recipients to Receive Stimulus Checks
WASHINGTON – The U.S. Department of the Treasury and the Internal Revenue Service today announced that Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive an Economic Impact Payment. Instead, payments will be automatically deposited into their bank accounts.
March 30, 2020
The legislation will provide one-time checks of $1,200 to Americans with adjusted gross income up to $75,000 for individuals and $150,000 for married couples. Individuals and couples are eligible for an additional $500 per child. The government rebates will be pared by $5 for each $100 of income over those thresholds, completely phasing out for individuals whose incomes exceed $99,000, $146,500 for head of households with one child, and $198,000 for joint filers who don’t have children.
Eligible U.S. residents must have a work-eligible Social Security number to receive such a check and must not be claimed as a dependent by another taxpayer, according to Senate documents. Unlike an earlier proposal crafted by Senate Republicans, the payments won’t be set at a lower level for some low-income Americans.
Other provisions for individuals include:
- Waiving early withdrawal penalties for up to $100,000 in COVID-19-related withdrawals from qualified retirement accounts, and allowing it to paid back or included ratably in income over three years
- Doubling the amount taxpayers can borrow from certain qualified retirement accounts to $100,000
- Suspending required minimum distributions for 2020
- Allowing an above-the-line deduction for up to $300 in charitable contributions for taxpayers who do not itemize deductions in 2020
- Removing the AGI limit on individual itemized deductions for charitable contributions in 2020
- Excluding employer student loan repayment assistance of up to $5,250 from income in 2020
- Permanently restoring the ability for taxpayers to use health savings accounts and flexible spending arrangements to purchase over-the-counter medicine
Also included in this legislation is broad expansion in unemployment benefits, which would be extended to nontraditional employees, including gig workers and freelancers. The agreement is set to increase current unemployment assistance by $600 a week for four months.
The stimulus package included $350 billion in loans to small businesses in an effort to keep Americans on payrolls as economic activity across the country comes to a standstill. Under the new program, loan money that small businesses use to cover payroll expenses, rent, interest on mortgage obligations and utilities will be forgiven. The legislation would also provide billions in debt relief on existing loans.
Other provisions for Businesses include:
- Allowing net operating losses (NOLs) arising in 2018, 2019 and 2020 to be carried back five years and suspending the 80% taxable income limit until 2021
- Increasing the taxable income threshold for the Section 163(j) limit on the interest deduction from 30% to 50% for tax years beginning in 2019 and 2020 and allowing taxpayers to use 2019 taxable income to calculate the 2020 limit
- Allowing corporations to claim refunds for all remaining AMT credits in 2018 and 2019
- Correcting an error in TCJA that prevented qualified improvement property (QIP) from qualifying for 100% bonus depreciation
- Suspending payment requirements for the 6.2% employer portion of Social Security taxes from the date of enactment through the end of 2020, with half the balance due by the end of 2021, and the other half due by the end of 2022
- Creating a new refundable employee retention credit of up to $5,000 for paying wages while business operations are suspended, or if gross receipts for a business drop by 50%
- Increasing the taxable income limit on corporate charitable deductions from 10% to 25% and contributions of food inventory from 15% to 25%
- Suspending the limit on excess business loss deductions under Section 461(l) in 2018, 2019 and 2020 so that it takes effect for the first time in 2021
- Suspending 2020 funding obligations for single-employer defined benefit pension plans until Jan. 1, 2021 (with interest due) and allowing pensions to use the prior year’s status for certain benefit restrictions
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