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The 3rd and largest government action taken so far in this pandemic includes many different provisions. For details, here's a really helpful COVID-19 reference center, and here are a few highlights:
- Direct payments: If you filed taxes in either 2018 or 2019, you will receive a one-time direct deposit of up to $1,200 and married couples will receive up to $2,400, plus an additional $500 per child. The payments will decrease for incomes over $75,000 for individuals and over $150,000 for married couples. If you don't get your full aid payment based on your 2018/2019 income, you may be eligible for additional credits on your 2020 tax return (regardless of your 2020 income, you won't have to repay the aid that you receive this spring/summer).
- Unemployment: The relief act provides extended unemployment insurance, expands eligibility and offers workers up to an additional $600 per week, for four months. This program also applies to the self-employed, allowing them to apply for unemployment benefits if affected by COVID-19. As of today, the MN unemployment website states that they are "awaiting guidance" regarding the expansion of Unemployment Insurance. So, as much as we want to help you, we will NOT be able to answer additional questions on this; you will need to work directly with the MN unemployment office and/or wait for them to update their website. If you believe you qualify, our advice is to create an account at www.UIMN.org and check back frequently for updates.
- Payroll taxes: The measure allows employers to delay the payment of their portion of 2020 payroll taxes until 2021 and 2022. We're not sure how payroll software will handle this yet, however, please remember that you can only delay a portion of your 941 tax payment, not the entire payment.
- Use of retirement funds: The bill waives the 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes, retroactive to Jan 1st, 2020. Withdrawals are still taxed, but taxes are spread out over three years, or the taxpayer has the three-year period to roll it back over.
- 401(k) loans: The loan limit is increased from $50,000 to $100,000.
- RMDs suspended: Required Minimum Distributions from IRAs and 401(k) plans (at age 72) are suspended.
- Small business relief: Companies with 500 employees or fewer, that maintain their payroll during coronavirus, can receive up to 8 weeks of cash-flow assistance from the SBA. If employers maintain payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven.
Thanks for sticking with us through this.
We hope you're all doing your part and staying safe at home. Our Tax Preparers are certainly beginning to hit their exhaustion limit, as we've been working 7 days a week since January. Since the filing/payment deadline has moved to July 15th, we are going to decrease our working hours to maintain sanity, marriages and the ability to finish what is now a marathon-length tax season. We apologize if our response times have slowed, but we're pulling double-duty trying to file last year's tax returns AND stay current on the rapidly changing laws of 2020.
We ask that you please read our Newsletter Archives, the FAQs and our Special COVID-19 Links sections before emailing us with questions. We know everyone is anxious to apply for expanded unemployment benefits, but we don't have any answers on how to do this yet. Our best advice is to create an account at www.UIMN.org and then apply for benefits once their website is updated.
-- Mark, Alyssa and The Fox Tax Team
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