COVID-19 Tax Relief Info in Jefferson City and Central MO

Are you still waiting for your Economic Impact Payment? Did you get your payment but it was for the wrong amount?

The IRS initially said you needed to wait until filing your 2020 tax return to resolve any issues with missing or incorrect Economic Impact Payments. Thanks to the prodding of the Taxpayer Advocate Service, the IRS has established procedures to help correct payment issues in the following scenarios:

• Missing dependent. The IRS will issue supplemental payments in the coming weeks to eligible individuals who normally do not have to file a tax return and claimed at least one qualifying child but did not receive the qualifying child portion of the payment.
• Injured spouse. Eligible individuals who filed for or can file for Injured Spouse Allocation (Form 8379) and did not receive their Economic Impact Payment will receive their payment in the coming weeks.
• Math error. Eligible individuals whose payment was based on a 2018 or 2019 tax return where the IRS adjusted the return for a math error that negatively impacted the original amount of the payment will now receive a payment for an approved adjusted amount. The IRS will work with the taxpayer to resolve the math error and, if appropriate, issue a payment for the additional amount.
• Victims of identity theft. Eligible individuals who were victims of identity theft have often not received a payment or the amount received is incorrect. The IRS will adjust the payment amount once the identity theft issue is resolved.
• Deceased or incarcerated spouse. Eligible individuals often have not received an Economic Impact Payment because they filed a joint return with a deceased or incarcerated spouse. The IRS will recalculate the payment and issue it only to the non-deceased/non-incarcerated spouse.

What you need to do

Contact the Taxpayer Advocate Service to determine if your Economic Impact Payment will either be corrected now or in 2021 when you file your tax return. The Advocate Service will be providing more details in the coming weeks about how to reach out to them for assistance.

Thieves are getting creative with different ways to gain access to your checking account and personal information during the COVID-19 pandemic. Here are some of the reported schemes:

Mandatory online COVID-19 Test

Individuals posing as workers from the U.S. Department of Health and Human Services or other federal departments use text messages to instruct you to click on a link to complete a mandatory online COVID-19 test. However, there is currently no way of conducting a COVID-19 test online.

You’ve been in contact with COVID-19

This scam sends an e-mail to warn you that you came into contact with a colleague/friend/family member who has COVID-19. The e-mail instructs you to download and print an Excel spreadsheet and bring it to the nearest COVID-19 testing site. After opening the spreadsheet, you are told they need to enable the content in order to view the spreadsheet’s details. Malicious macros are then activated when you click on the Enable Content button, infecting your computer.

SBA loan applications

Fraudulent e-mails were sent out as correspondence from the U.S. Small Business Administration telling you that you could apply for a small business disaster assistance grant. You are instructed to sign an attached document and upload it to the SBA’s website. When the attachment is downloaded, a remote access trojan was installed on your computer or other electronic device.

COVID-19 malware

Online fraud and schemes wouldn’t be complete without coronavirus-themed malware. There are multiple variants of a master boot record (MBR) locker, including one called coronavirus.bat. The malware replaces the MBR of a computer, preventing the operating system from starting and instead displays a ransom note or other message.

Fake pop-up testing sites

Hands down the most brazen attempt to steal personal information are pop-up COVID-19 testing sites. The thieves tell passersby that they can be tested for COVID-19 for a $240 fee. They then pocket the cash and use the personal information gathered from individuals to make fraudulent Medicare and Medicaid claims.

The IRS recently announced the launch of websites for non-tax filers to register to receive their economic impact payment and a new Get My Payment tool. Here is what you need to know.

Background

As a response to the coronavirus pandemic, the government is sending $1,200 to single taxpayers with income less than $75,000 ($98,000 with phaseouts). $2,400 is being sent to married taxpayers with income less than $150,000 ($198,000 with phaseouts). An additional $500 is being sent for each child under the age of 17.

The Problem

The payments are being made based on 2019 or 2018 tax returns. If you do not need to file a tax return, you run the risk of not receiving this payment. Additionally, getting payments out to everyone is technically complex. The IRS must look at both 2019 tax returns and 2018 tax returns PLUS they are directed by Congress to match these tax files against two years of Social Security payments for seniors. Not an easy task!

The Solution

The IRS worked to launch a way to register to receive your payment and to determine the status of your payment. You can find the sites here:

For non-filers: Submit information to receive Economic Impact Payment

Payment status and direct deposit registration: There is also an IRS provided Get Your Payment tool to register to receive your payment via direct deposit.

It can be found here: Get My Payment Tool

This tool will also be used to review the status of your payment.

Who should use

If you fall into one of these cases, you need to review whether it makes sense to use these tools.

Not required to file. If you have not filed a tax return in either 2018 or 2019, using this tool or other tax filings is the only way to receive the payment.

College students. If you are not a dependent on someone else’s tax return, you need to look into using the tool. If you are a dependent, It may also be worth a conversation to see if you can or should change your filing status in 2019 in order to receive this payment.

Non-filer. Even if you know you need to file a tax return, but have not yet done so, consider using the non-filer tool. You will still need to file a tax return, but in the meantime, you can receive your payment.

Seniors. Seniors that do not file tax returns in 2018 or 2019 will eventually receive the payment based upon their form 1099-SA or railroad retirement information. The non-filer site asks you not to register, but you may receive the payment sooner AND protect your identity from would be thieves by filing a tax return.

To check on status or speed things up. Want faster payment? Payment not yet received? Use the Get My Payment tool.

The Economic Impact Payments are now officially being sent out, so the sooner you let the IRS know that your payment should be included, the sooner your payment will arrive.

Taxpayers are beginning to receive their $1,200 one-time Economic Impact Payment plus $500 for each dependent under the age of 17.

First round of payments are underway

Payments have begun hitting the checking accounts of taxpayers who included their bank’s routing and account numbers on their 2019 and 2018 tax returns. So now is the time to starting checking your bank account to see if your payment is processed.

IRS launches new simple filing site

For those who have not filed a tax return for 2019, there is an opportunity to receive your stimulus payment a bit more quickly. There is a new simple filing site with a link to a simple filing form. This will provide the IRS with the information necessary to issue your stimulus check via direct deposit. The alternative is waiting up to several months to get your stimulus payment via mail in the form of a physical check.

Who should use the simple tax filing site

Consider using the simple file site to provide direct deposit information in the following situations:

You have not filed a 2018 or 2019 tax return.

You have not yet filed a 2019 tax return.

You are not required to file either a 2018 or 2019 tax return. In this case, you will never receive your stimulus check unless you use this new simple filing form.

A special note for non-filing seniors

The Treasury has directed the IRS to provide payments to seniors based on Form 1099-SSA reporting as well as tax filings. This creates an added level of complexity for the IRS to figure out who to pay and who has already been paid. While they are requesting SSA-1099 recipients without 2018 and 2019 tax returns to hold off filing a simple tax return, you may still wish to do so if you need your payment more quickly. Remember, this filing also protects your Social Security number from being used by identity thieves! Just be prepared to return an extra payment should your tax filing confuse their systems and create a double payment.

Remember, it is going to take some time for the IRS to process all these payments, especially when their data is constantly shifting as people continue to file tax returns, including their new simple filing form.

June 15 deadline moved to July 15

The IRS recently announced a delay in the deadline to file 2nd quarter estimated tax payments.

Background

The IRS issued a tax filing and tax payment delay due to the coronavirus pandemic, from April 15, 2020 to July 15, 2020. Many payments are included in this delay for both individuals and small businesses. It includes filing of all tax returns, the related payments and all estimated payments typically due on April 15.

The problem

By moving the 1st quarter estimated tax payments from April 15 to July 15, the 1st quarter estimated payments were then actually due one month later than the 2nd quarter estimated payment deadline!

Current situation

With IRS notice 2020-23, the 2nd quarter estimated payment due date is now moved July 15, 2020. So you will need to plan accordingly. This includes both individual and corporate payments.

Reminder, just because the IRS grants a payment delay, does not ensure your state will follow suit. So pay attention to the state's filing situation as well.

Should you have any questions, please call.

In recent IRS notice 2020-23, the IRS is granting a delay in claiming 2016 tax refunds until July 15, 2020.

The problem

If you do not claim a refund in time, you lose it forever. So on April 15, 2020 if you are owed a refund for 2016 and do not file a tax return to receive it, you lose your money forever!

More time to file

Because of the coronavirus pandemic, the tax filing date for 2019 is moved from April 15 to July 15. What is now clear, is that with this filing date move, it also includes the statute of limitations to claim any unclaimed refunds for the 2016 tax year.

What to do now

If you did not file a tax return for 2016 and you believe you are owed money, you now have 90 more days to claim it. But don’t delay! The IRS is very strict on these dates. If you are even a day late, your money is lost forever.

While the IRS is granting this delay, it is not clear if states are following suit. So, if you have a state tax refund you need to understand their deadlines as well.

In addition to filing delays and a one-time stimulus payment, the IRS is implementing many changes in response to the coronavirus pandemic. Here are some of the major topics that could affect you and your family.

Early distribution penalty waived

The 10% early distribution penalty on up to $100,000 of retirement withdrawals for coronavirus-related reasons is waived during 2020. New provisions allow tax liabilities on these distributions to be paid over a three-year period. The new rules also allow individuals to return these distributions to the retirement account over a three-year period and not be subject to annual contribution limits.

Action: This could be a great way to handle emergency payments until you receive a stimulus check, unemployment payments, or a pending small business loan.

Required Minimum Distributions (RMDs) waived for 2020

Required minimum distributions (RMDs) in the year 2020 for various retirement plans is suspended. The corresponding 50% penalty associated with not taking an RMD is also suspended in 2020.

Action: Taking out distributions when the market takes a tumble can hurt future retirement income for many years. This change allows you to wait to let the value in your retirement account rebound before you withdraw funds.

IRS Installment agreement suspension

The IRS announced suspension of payments of all amounts due from April 1 through July 15, 2020 and will not default any installment agreement during this period. Interest will continue to accrue on all installment agreements.

Action: Being on the bad side of the IRS in never fun. If you currently have an IRS installment agreement, look to take advantage of this delay.

Offers-in-compromise

The IRS will allow you until July 15, 2020 to provide additional requested information for any pending offers-in-compromise (OIC) and will not close out the OIC during this time without your consent. The IRS is also suspending any payments due under an OIC until July 15, 2020.

Enforcement Activities Suspended? Not so fast...

The filing and enforcement of liens and levies will generally be suspended. However, IRS Revenue Officers will continue to pursue high income non-filers and initiate other actions when warranted.

No new audits

The IRS will not initiate new audits during this time, but will act to protect the statute of limitations.

Much is happening during this unique time in our country's history. Rest assured, as changes are made you will be informed. In the meantime, please keep yourself and your family safe.

There is confusion regarding whether seniors who receive Social Security have to file a simple tax return to get their $1,200 stimulus check. The answer from the U.S. Treasury Department is NO.

So if you received a 1099-SSA or RRTA in 2019 or 2018, the payment will be automatic….eventually.

The problem

The IRS challenge is to send out one-time coronavirus stimulus payments quickly. Using 2018 and 2019 tax-filing information is the easiest way to do this. So if you haven’t had to file a tax return in either 2018 or 2019, you won’t receive a payment. The IRS solution to this problem is to have you file a simple tax return. Unfortunately, the bill and the Treasury Department state that the IRS must also use form 1099-SSA (Social Security Retirement payment) filings by themselves to automatically send payments.

So how does the IRS make sure they do not double pay? This could happen since those seniors who DO file a tax return (and receive a 1099-SSA) will already be paid. The answer? A massive undertaking to match two large databases and identify those that STILL NEED TO BE PAID!

Can you image the cost and delays this is going to present to the IRS?

YOUR solution: File a tax return!

If you want to ensure a speedy payment, file a tax return - even if you do not need to do so. This will effectively solve the IRS system problem for your account. The worst-case scenario is you are paid twice and then you simply return the extra payment.

So consider filing your tax return or helping a senior citizen who does not file taxes, file a simple tax return. Plus there is the added benefit of protecting their IRS tax account from potential identity thieves!

There's little question the tides are moving towards a higher tax environment with multiple trillion-dollar spending bills, a new administration, and deficits as far as the eye can see. Instead of feeling helpless, here is a quick look at what might be on the horizon and some thoughts on how to be prepared.

Self-employment tax risk. Social Security and Medicare fund collections took a hit during the pandemic. This is because of high unemployment and new federal benefits allowing employers to receive a credit on these taxes to help continue paying employees to take leave due to COVID-19. Over the next few years, there will be tremendous pressure to add funds back into these programs. This might be done by increasing the taxability of benefits or dramatically increasing the income subject to Social Security taxes.

Potential action: Continue to work on a retirement plan that is not as dependent on Social Security benefits. If you are a small business owner, and your business income is subject to self-employment tax (SE tax) now is a good time to consider reorganizing your business to shield some of your business income by moving to an S corporation.

Capital gains tax rate increases. In 2021, the highest long-term capital gains tax rate is 23.8% (20% capital gains tax rate plus a 3.8% surtax as part of the Affordable Care Act) but if planned correctly, you could pay either nothing or 15% federal tax on long-term capital gains. Congress could see the sales of long-term securities and other assets as a valuable source of tax revenue by eliminating this preferential tax rate and instead using ordinary income tax rates (currently as high as 37%).

Potential action: Actively manage investment profits, netting your gains against your losses. If you have any assets that have appreciated over time and intend to sell in the near future, consider trading in 2021 to avoid a potential increase in the capital gains tax rates.

Tax planning problems for your estate. There are several considerations to take into account when looking at your estate’s tax plan. First, under current law, say for example your parents bought one share of stock in 1980 for $10 and you inherit the share of stock when it’s worth $100 and immediately sell it for the same $100. You would not owe any federal taxes on the $90 difference. In the future, this feature, called stepped-up cost basis, may become limited or removed to increase tax revenue. Second, the estate tax rate currently set at 40% is under pressure to be increased. This is entirely possible when you consider that this tax rate was 55% in 2001.

Potential action: Consider gifting money or securities to family, friends or a foundation during your lifetime. Individual gifts in 2021 of $15,000 or less ($30,000 for married couples) don't count against the lifetime gift-giving limit.

Tax rate volatility. With huge federal deficits that are now beyond the scope of imagination, what will happen next? Just the latest legislation adds a whopping $1.9 trillion to what must be paid back. While interest rates are being held at historic lows to help lower the cost of this added debt, it cannot continue unabated. And the meteoric rise in home prices is just one of the costs of this low-interest approach. The current proposals in Washington suggest an increase in tax rates is not too far in the distant future.

Potential action: Do a forecast of your future income and tax rates. If you think tax rates and your taxable income will be increasing in the next few years, you will want to move as much money as possible into tax-advantaged accounts like Roth IRAs. You should also understand any state tax ramifications to help with your tax planning.

While Congress is debating what to do with your tax rates, now is the time to create a strategy so that if or when tax rates do increase, you will be prepared.

The American Rescue Plan was recently signed into law and includes a third round of stimulus payments and many tax-related provisions. Here are some of the more prominent sections of the new legislation.

Stimulus checks. Qualifying individuals will receive an economic impact payment of $1,400 ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent. For purposes of this payment, dependents also include college students and qualifying relatives who are claimed as dependents. Payments will be sent to taxpayers beginning in mid-March.

The payments are phased out based on a taxpayer’s adjusted gross income (AGI). For single taxpayers, the payment phases out between $75,000 and $80,000; for married taxpayers who file jointly, the phaseout is between $150,000 and $160,000; for heads of household, the phase-out occurs between $112,500 and $120,000. The phaseouts do not increase based on the number of dependents.

Your 2020 tax return will be used to determine your AGI for purposes of the payment phaseout. If you haven’t filed your 2020 return, your 2019 tax return and corresponding AGI will be used.

Child tax credit increase. If you normally qualify for the child tax credit, you’ll get either an extra $1,000 or $1,600 per child for a total of $3,000 per child (or $3,600 for children under 6 years old). Children who are age 17 are also eligible for the credit. You also have the option of receiving 50% of your total child tax credit in monthly payments from July through December 2021.

Tax break for unemployed in 2020. If you received unemployment compensation in 2020, the first $10,200 you received won’t be taxed on your 2020 federal tax return.

Free COBRA health insurance. If you’ve been laid off, you can apply for free COBRA health insurance coverage for the six-month period between April and September 2021. This assistance is only available for employees and their family members who experience a loss of group health insurance coverage due to involuntary termination or a reduction in hours of employment.

Tax break for student loan forgiveness. Student loans that are forgiven between Jan. 1, 2021 and Dec. 31, 2025 won’t be considered taxable income for federal tax purposes.

Big increase in Employee Retention Credit. Businesses can get up to a $28,000 tax credit per employee in 2021, up from a $5,000 maximum credit in 2020. This credit can be claimed through Dec. 31, 2021.

There’s a lot to unpack with this new relief legislation. Stay tuned for continued updates as they become available.

A surprise tax break for 2020 was passed into law in March of 2021. It may impact your situation if you received unemployment income this past year. This will mean filing amended tax returns for some and a delay in preparing your tax return for others.

Background

Unemployment compensation was received by millions of Americans during the pandemic.

But there’s a Catch 22 with unemployment compensation. While it’s welcome income during a tough time if you’ve lost your job, it’s also classified as taxable income to be reported on your tax return.

The recently passed American Rescue Plan now makes part of your unemployment benefits free from federal taxation. Specifically, the first $10,200 of 2020 unemployment compensation is now tax free. Depending on your tax bracket, this tax break could mean $1,200 or more in taxes saved on your 2020 return.

The problem

The new legislation which contains this tax break unfortunately didn’t become law until March of 2021, a full three months after the end of the tax year and after millions of Americans had already filed their 2020 tax return! And to make matters worse, the IRS has been given no time to figure out how this tax break will be reported on your 2020 tax return.

Understanding your situation

If you received unemployment compensation in 2020, here’s what you need to know:

If you’ve already filed your 2020 tax return: Wait for further instructions. Lawmakers are currently asking the IRS if it’s possible to automatically make adjustments and issue a refund if you’ve already filed your 2020 return. Issuing an automatic refund will also avoid the need to file an amended tax return. So there is no need to call, we can only wait for clarification.

If you HAVE NOT filed your 2020 tax return: Filing your tax return will be delayed until guidance is received from the IRS and it is deployed into tax filing software. It’s unclear when the IRS will issue this guidance. Once this guidance is received, delayed tax filings can proceed. In the meantime DO NOT delay turning in your tax information as returns can still be prepared and be ready to be filed once IRS guidance is received.

Be assured you will be informed once the IRS issues further instruction on how to claim your tax break. In the meantime, enjoy the extra tax savings you’ll get some time in the near future!

Don’t get shocked by a high tax bill! Be prepared for these pandemic-related tax surprises when you file your 2020 tax return.

• Taxes on unemployment income. If you received unemployment benefits in 2020, you need to report these benefits on your tax return as taxable income. Check to see if either federal or state taxes were withheld from unemployment payments you received. If taxes were not withheld, you may need to write a check to the IRS when you file your tax return. 
• Taxes from side jobs. Did you pick up a part-time gig to make ends meet? Payments received for performing these jobs may not have had your taxes withheld. If this is the case, you’ll need to pay your taxes directly to the IRS on April 15.
• Unusual profit-and-loss. If you run a business that was hit by the pandemic, you may find your estimated tax payments were either overpaid or underpaid compared to normal. Now that 2020 is in the books, run a quick projection to ensure you are not surprised with an unexpected tax bill when you file your tax return.
• Underpayment penalty. If you did not have proper tax withholdings from your paycheck or your estimated tax payments weren’t enough, you could be subject to an underpayment penalty. While it’s too late to avoid a penalty on your 2020 tax return, the solution in the future is to make high enough estimated tax payments each quarter in 2021 or have the appropriate amount withheld from your 2021 paychecks.
• A chance to claim missing stimulus payments. (A good surprise!) If any of your stimulus payments were for less than what you should have received, you can get money for the difference as a tax credit when you file your 2020 tax return.

Please use these examples to prepare yourself for a potential tax surprise during the uncertainty caused by the ongoing pandemic.

Suppose you’re switching jobs if you were furloughed because of the pandemic or you’re simply searching for greener pastures. If you have a 401(k) from your soon-to-be former employer, you must decide what to do with your retirement account when you leave. Here are your four options:

• Leave the money in your previous employer’s pension plan.
• Roll over the money to your new employer’s pension plan.
• Roll over the money into an IRA. 
• Take the money and run.

So which of these options should you choose? Here are some things to consider as you think about what to do with your 401(k) account:

Borrow the money. If you want to borrow money from your retirement account in the future, you’ll want to roll the money into another 401(k). While you can borrow money out of your 401(k), that option is not allowed with an IRA.

Take the money. This year may be the best time to make a withdrawal from a retirement account. In a normal year, when you make an early withdrawal from a retirement account, you owe income taxes on the amount of the distribution plus a 10% early withdrawal penalty. In 2020, this 10% penalty has been suspended. So while you’ll still pay taxes on the distribution, you can avoid the early withdrawal penalty.

Invest the money. This is why you started contributing to a 401(k) account, right? While it might be tempting to borrow or take an early distribution from your retirement account, you’ll also be depleting future earnings. So you consider whether you truly need the money now to pay for an emergency or if you’re ok leaving it alone in your 401(k).

Does your paycheck look a little higher than normal? If so, it could be a tax time bomb.

The Problem

A payroll tax deferral beginning September 1 was recently signed via a presidential executive order. This deferral of the employee's portion of Social Security will raise your paycheck temporarily until January, 2021. Beginning in 2021, the deferred Social Security will then need to be paid.

This year’s tax deferral is NOT currently a tax holiday. So even if your employer removes your Social Security tax from your paycheck, there is a real possibility you will need to pay it back between January and April, 2021. That could mean a pretty large tax bill for you in early 2021!

What you need to know

• It is optional for most employers. Your employer is not required to defer your Social Security payments. However, federal employees will be seeing this tax reduction from September through December of this year.
• Compare paychecks. If you are unsure whether your employer is participating in the tax deferral, get your last paycheck from August and your first paycheck from September. Compare the amount of Social Security and other taxes withheld from your August paycheck to your September paycheck. If the amounts are the same, then your Social Security and other taxes are still being withheld.
• If you notice that the amounts are different, or that no Social Security taxes are withheld from your September paycheck, then that’s a signal you may have a tax repayment bill in early 2021.
• Remember to keep checking each paycheck. Companies are struggling to figure out if they are required to comply with the presidential executive order, payroll providers are trying to figure out how to comply, and everyone is wondering whether the tax obligation will be permanently forgiven. So you will need to keep checking your paycheck throughout the balance of 2020.
• Be prepared to pay it back. If taxes have been deferred from your paycheck through the end of 2020, be prepared to have your paycheck withholdings increase substantially beginning in 2021. If possible, open a savings account to set aside the taxes that were not withheld from your paychecks. When it comes time to pay your taxes, you will have funds to weather the repayment storm.
• Check for updates. There’s a chance Congress passes a law that forgives the deferred taxes. If this happens, you will have a nice start on an emergency fund should you need it.

If you have any questions about how this payroll tax holiday affects you, please call.

This year’s pandemic highlights the importance of having enough money set aside in an emergency fund to cover six to nine months of key expenses should you lose your job.

But how do you build an emergency fund if you don’t have any extra money? The easiest way to accomplish this is by reducing your expenses. Here are some creative ways to increase your cash flow by cutting your spending.

How much you need

First, determine how much of an emergency fund you need. Identify the minimally essential monthly bills and multiply by the number of months of funds you'll need. At minimum include the following:

• Food
• Housing costs, including rent or mortgage payments
• Medical insurance
• Transportation
• Phone service and other utilities

Ideas to fund your emergency account

Temporarily suspend nonessential monthly expenses. Ditch your $150 cable bill for a $20 streaming service. Cook your meals from scratch instead of purchasing pre-packaged food. Eliminate or re-think your entertainment spending. Until you get your emergency fund fully funded, consider less expensive alternatives for items you normally purchase.

• Radical cutbacks for a set period of time. Can your family live with one car instead of two? Instead of downsizing from cable to a streaming service, what about getting rid of television subscription fees altogether? Consider if there are areas you’d be willing to make a radical (and temporary) change to free up some cash.
• Track your spending. When you go on a diet, nutritionists often recommend counting calories. When going on a spending diet, consider tracking your purchases. You will quickly see items that are not essential. Spending at coffees shops, paying for multiple streaming services and paying for extra cell phone services are just a few examples. You may discover problem areas you didn’t know about once you start writing down your spending in a notebook or on a spreadsheet.
• Stick to a list. Avoid impulse purchases by making a list of items you need to purchase, then sticking to the list. At the beginning of every month, write down the household items you need to purchase that month and do your best not to deviate from it. You can use this strategy with both in-person and online shopping. Remember, merchants are scientists when it comes to tempting you with impulse purchases.

You may need to get creative with your approach, but finding the funds to build your emergency fund is essential, now more than ever.

More of a business’s Paycheck Protection Program (PPP) loan used to pay certain owner-employee salaries can be forgiven under updated guidance from the Small Business Administration (SBA).

What Changed

The original PPP forgiveness rule stated that any employee who also had a stake in a company – regardless of how small the stake was – that received a PPP loan was eligible to have a maximum of $20,833 of proceeds used to pay the stakeholder’s salary forgiven.

Under the revised guidance, if an owner-employee has an equity stake under 5%, the owner-employee can get a maximum of $46,154 of their salary forgiven.

Forgiveness Limitation for Sub-Leased Spaces

The revised SBA guidance also clarified limitations on sub-leased spaces. While rent and lease payments are forgivable non-payroll expenses, businesses cannot receive forgiveness for the portion of the rent a sub-tenant pays you.

What you need to do. Only approved lenders can submit PPP loan forgiveness applications to the SBA, so stay in touch with your lender about how to fill out the loan forgiveness application.

Also, stay in touch with your lender regarding the possibility of blanket forgiveness. There has been a push for blanket forgiveness for smaller loans, which comprise the majority of PPP loans granted. If blanket forgiveness under a certain threshold is granted, it could make most of the current loan forgiveness application process irrelevant in the future.

Did you receive a required minimum distribution from a retirement account in 2020? If so, you may be able to return it to another retirement account by August 31 without taking a tax hit. Here is what you need to know:

Background on distributions and rollovers

You generally must begin taking distributions from IRAs and qualified retirement plans after reaching age 72 (recently increased from age 70½, beginning in 2020). The distribution amount is based on life expectancy tables and your account balance on December 31 of the prior year. Payouts are subject to tax at ordinary income rates.

To avoid paying taxes on a retirement account distribution, you generally must roll over the distribution (return the funds) to another qualified retirement account within 60 days. Another significant rollover rule is you can only do one IRA-to-IRA rollover in any 12-month period, regardless of the number of retirement accounts you own. (Rollovers from traditional IRAs to Roth IRAs are not limited.)

Distribution and rollover flexibility in 2020

A new law passed in March waived 2020 required minimum distributions from retirement accounts. The IRS also extended the normal 60-day window within which to make a rollover to August 31.

The Problem

You may have received a distribution from a retirement account prior to the IRS's announcement of being able to forgo a distribution this year. So are you allowed to change your mind and put your 2020 distribution back into a retirement account without taking a tax hit? The answer is yes! But you must act soon.

WHAT YOU NEED TO DO

Roll over to an IRA ASAP! You can avoid paying taxes on your 2020 IRA distribution by rolling it back into its original account or another IRA by August 31. Most 2020 distributions received from a retirement plan are eligible to be rolled back to the original retirement account, including the following:

• Distributions received after December 31, 2019
• Distributions received by beneficiaries from an inherited IRA
• Distributions that would normally violate the once-per-12-month rollover rule when rolled to the new account
• Report your withdrawal as a Coronavirus Related Distribution (CRA). If you want to keep your 2020 distribution, another option is to report your IRA distribution as a CRA. You can repay the distribution back into your retirement account over a period of three years. If you pay income tax on your distribution and then later re-contribute the funds to a retirement plan, you will be able to file an amended tax return to recover the taxes paid.
• Roll over to a Roth, 401(k) or 403(b). Another option is to roll over the distribution to a Roth IRA, 401(k) or 403(b) account if any of those options are available to you.

This exercise can get complicated. If in doubt, please call for assistance.

You're not alone in trying to navigate the financial uncertainty during the coronavirus pandemic. 10 million+ American workers who lost their paycheck because of COVID-19 need to find creative ways to pay bills.

Here are 6 ways to get cash to help pay for your monthly expenses.

Apply for state unemployment benefits. Recent federal legislation expands traditional state unemployment payments from 26 weeks to 39 weeks. State unemployment offices are also administering an additional weekly payment of $600 to unemployment benefit recipients courtesy of the federal government. This additional $600 weekly payment runs through July 31, 2020. If you haven't already done so, visit your state's unemployment insurance website to fill out your application. Remember, this federal unemployment assistance now applies to self-employed workers and part-time workers.

Look to your retirement accounts. While not ideal, you can withdraw up to $100,000 penalty-free from your retirement accounts because of the pandemic. You can then pay it back within the next three years without penalty or being subject to annual contribution limits!

Defer a housing bill. Talk to your mortgage holder and landlord about deferring a payment or two. Recent legislation suspends required payments on certain loans and halts foreclosures for at least 60 days. But you must contact your lender to discuss the specifics of your situation. It may be trickier to work with landlords to defer rent payments, but many property owners have signaled a willingness to work with tenants over the next several months to defer or forgive payments.

Talk to lenders about credit card payments. Call your credit card company to see if they are willing to defer your payment for several months. While credit card companies haven't explicitly said that consumers can skip or defer credit card payments, encourage anyone experiencing financial hardships because of COVID-19 to contact their customer service teams to discuss their individual situation.

Get the word out. Tell everyone in your network that you could use work. While the U.S. unemployment rate is close to 20%, that still means 80% of Americans are still working. You may have friends and family that could help you weather the financial storm for several months. But you won't know unless you ask.

Downsize your budget. Now is a good time to create or update your monthly budget. Keep track of where every dollar goes. Identify non-essential spending you could put on hold until you find your next job.

Who would ever have foreseen a time when petroleum companies would pay you to take their oil? This phenomena underscores the concept that within every problem there is opportunity. Here are some tax strategies to think about during the coronavirus pandemic.

Look into Roth rollovers

If you have high balances in tax-deferred retirement accounts, consider rolling them into tax-free Roth accounts. Since you have to pay tax on the funds you convert, the lower value of the accounts means less tax is due. Plus if your income is lower, the tax hit will also be lower. The good news here is that growth in these funds when the economy recovers will now be tax-free!

Consider removing a dependent

Stimulus payments help most families with kids, except if they are over age 16. By removing them as a dependent and then filing their own tax return, they may be eligible for a $1,200 stimulus payment from the federal government.

Capture capital losses, then reinvest

Have a stock you like long-term, but it took a hit? Consider selling it, then repurchasing after 30 days. This will avoid the wash sale rules in the tax code. This technique can lower your cost and it can also be used to offset other investments you sell at a gain.

Time to buy or sell?

The value of real property of all kinds will be moving. Some will move up, some down. So now is a time to think about buying or selling. If you currently own property, don’t forget to look into the like-kind exchange rules to help defer any tax bite!

Leverage penalty-free withdrawals

You can now take up to $100,000 out of a retirement account and avoid the 10% early withdrawal penalty. Even better, the income tax on these withdrawals can be paid over three years and you can always repay the money over that same time period. There may be planning opportunities around this added flexibility, but only if you review your options and correctly use the funds.

It is more important than ever to keep up with rule changes and be on the lookout for tax planning opportunities. Call if you wish to discuss your options.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act recently signed into law provides a one-time payment, among other items, to individuals to help ease the economic strain caused by the coronavirus epidemic.

Here are the details of the stimulus payment initiative.

• WHO QUALIFIES TO RECEIVE A PAYMENT? A one-time payment of $1,200 will be sent to most adults. For every qualifying child under age 17, families will receive an additional $500. Retirees and people on disability are also eligible to receive a payment.
• WHEN WILL I GET MY PAYMENT? The IRS hopes to get the first batch of payments out the week of April 6. It may take some time for everyone to get their checks, assuming everything goes as planned.
• HOW ARE PAYMENTS BEING MADE? If you included your bank account and routing information on your 2019 tax return, you will receive your stimulus payment via direct deposit. If you haven't filed your 2019 tax return, the IRS will use information from your 2018 tax return. If you did not include your bank account and routing information on either your 2019 or 2018 tax returns, the IRS will allow you to request direct deposit from a screen (under development) from their website. All others will receive their payment via a check in the mail.

Alert! Invalid bank information. If you have not filed your 2019 tax return AND the direct deposit information on your 2018 tax return is no longer valid (i.e. you opened a new bank account), you will need to take action immediately! If you do nothing, the bank deposit will, hopefully, be rejected and you will receive your check in the mail. Expect a delay, however, as it may take several months to receive a check by mail. You can also try calling the IRS to update your information.

• WILL I GET THE ENTIRE AMOUNT? As with other government programs, there is an income phaseout. Here are the thresholds:

Single adults with income of $75,000 or less get the full $1,200. The $1,200 payment is reduced by $5 for every $100 in income above $75,000. Full income phaseout is $99,000.

Married couples with income of $150,000 or less get the full amount of $2,400. The payment is reduced by $5 for every $100, making the full payment phased out at $198,000.

Head of Household adults (normally single adults with children or other dependents) will receive the full $1,200 payment if they earn less than $112,500. Reduced amounts will go out to Head of Household adults who earn up to $136,500.

HOW WILL MY INCOME BE CALCULATED? Your 2019 tax return will be used to determine your income for purposes of whether you receive the full amount of the stimulus check and how many qualifying children you have. If you haven’t filed your 2019 tax return, your 2018 tax return will be used.

Alert! Don't use my current situation. It may make sense to get your 2019 tax return in immediately. Figure out if phaseouts using last year's information lowers your payment amount. If so, you may wish to file your 2019 now. So pull out last year's return and take a look!

Senior Alert! Seniors who did not file a tax return in 2018 or 2019 will automatically receive the payment based upon forms 1099-SSA and RRB-1099s. ( An April 1, 2020 U.S. Treasury press release clarifies much confusion on this topic.)

Alert! File a tax return. If you have low income or someone who does not typically file a tax return, you may wish to do so. A simple tax filing is all that is needed to ensure you receive the stimulus payment. Eventually, instructions to do this will be available on www.irs.gov/coronavirus.

• ARE THE PAYMENTS TAXABLE? No. These payments are not taxable.

Remember, this is only one of the many relief components in recently passed legislation. There are also unemployment benefits, small business benefits and much more to come.

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act provides individuals and businesses significant financial relief from the financial strain caused by the coronavirus epidemic.

Here is a snapshot of the unemployment benefits section of the bill and how it affects individuals and businesses.

• WHO QUALIFIES TO RECEIVE STATE UNEMPLOYMENT BENEFITS? In addition to full-time workers who are laid off or furloughed, the Act provides individuals who are not already eligible for state and federal unemployment programs, including self-employed individuals and part-time workers, a set amount of unemployment compensation.

HOW MUCH WILL I RECEIVE? There are two different components to the new law’s unemployment benefits:

1. Each worker will receive unemployment benefits based on the state in which they work, and
2. In addition to their state unemployment benefits, each worker will receive an additional $600 per week from the federal government.

HOW WILL BENEFITS FOR SELF-EMPLOYED WORKERS BE CALCULATED? Benefits for self-employed workers are calculated based on previous income and are also eligible for up to an additional $600 per week. Part-time workers are also eligible.

HOW LONG WILL THE STATE UNEMPLOYMENT PAYMENTS LAST? The CARES Act provides eligible workers with an additional 13 weeks of unemployment benefits. Most states already provide 26 weeks of benefits, bringing the total number of weeks that someone is eligible for benefits to 39.

HOW LONG WILL THE FEDERAL PAYMENTS OF $600 LAST? The federal payment of $600 per week will continue through July 31, 2020.

HOW DO I APPLY FOR UNEMPLOYMENT BENEFITS? You must apply for unemployment benefits through your state unemployment office. Most state applications can now be filled out online. Workers who normally don't qualify for unemployment benefits, such as self-employed individuals, need to monitor their state's unemployment office website to find out when they can apply, as many states need to update their computer systems to reflect every type of worker who is eligible to collect unemployment benefits under the CARES Act.

What to do NOW!

If you have lost your job, you must file for unemployment with your state as soon as possible. State offices and websites are being slammed, so the sooner you get in the queue the better for you and your loved ones.

The Emergency Coronavirus Relief Act of 2020 has extended through March 31 pandemic-related assistance for both employees and employers. Businesses with fewer than 500 employees can provide employees with paid leave, either for the employee’s own health needs or to care for family members, and be reimbursed the cost of the paid leave through a tax credit.

These benefits are currently available through March 31, 2021.

Here is a summary of the law’s benefits for employees and employers:

Paid sick leave for workers. Employees of eligible employers can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay ($510 daily limit applies) where the employee can’t work because the employee is quarantined and/or experiencing COVID-19 symptoms and seeking a medical diagnosis.

Paid leave for workers. Employees can receive two weeks (up to 80 hours) of leave at two-thirds of the employee’s pay ($200 daily limit applies) if they need to care for someone in the following situations: The need to care for an individual subject to quarantine, to care for a child whose school is closed or childcare provider is unavailable for reasons related to COVID-19.

Extended leave. In some instances, an employee may receive up to an additional ten weeks of expanded paid family and medical leave at two-thirds the employee’s pay ($12,000 overall twelve week payment limit applies).

Companies will get paid back. Businesses who pay employees the mandatory sick and childcare leave will get reimbursed through a payroll tax credit.

What it means for you

• Employees can take the necessary time to recover from being infected with COVID-19, or to care for a loved one, without fear of losing their job or salary.
• Employees can take the necessary time to recover from being infected with COVID-19, or to care for a loved one, without fear of losing their job or salary.

What you need to do now

EMPLOYEES. To take advantage of these paid leave provisions, you must provide your employer with documentation in support of your paid sick leave. There is yet no official application that needs to be completed. If you believe that your employer is required to provide paid leave but is not making paid leave available, or for other questions or concerns, you may call the Department of Labor's Wage and Hour Division at 1-866-4US-WAGE or visit www.dol.gov/agencies/whd.

EMPLOYERS. Here is what you need to do:

1. Keep detailed records - Be prepared to defend your request for federal assistance. Keep good records of who's asked for paid time off because of COVID-19 related circumstances. Ask your employee to provide a doctor's note when appropriate, along with a narrative written by the employee describing who in their family is infected or suspected of being infected with COVID-19 along with symptoms. Make sure the note is dated and relates to an approved reason for leave.
2. Talk to your payroll provider - Since businesses will be reimbursed through a payroll tax credit, any questions on how to get reimbursed should be directed at your payroll provider.
3. Post this notice! - Employers MUST post a notice of the Families First labor requirements in a conspicuous place on its premises. Click here to download and print this notice.
4. E-mail the notice! - An employer may satisfy the posting requirement by e-mailing or direct mailing the notice to employees, or by posting this notice on an employee information internal or external website. If your employees are working from home, this may be the only way to let them know the benefit exists.

Remember that currently these benefits have only been extended through March 31. Stay alert for further updates as another COVID relief package is currently being ironed out in Washington, D.C.