Coronavirus Taxes: What the COVID-19 Outbreak Means for Your Taxes

There’s plenty of information circulating about the tax ramifications of the Coronavirus outbreak—some of it accurate, and some of it not. We’re dedicated to helping you navigate your tax responsibilities and potential income due to the spread of COVID-19, along with providing answers to your Coronavirus tax relief questions.

Below, we’ve compiled the latest breaking news regarding taxes and financial changes due to the Coronavirus. We will regularly update this list as new information becomes available.

• President Trump signed into law a $2.2 trillion stimulus package, dubbed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) on March 28th.
• IRS has unveiled the People First Initiative to assist taxpayers by providing relief, including easing payment guidelines to postponing compliance actions.
• Most Americans making under $75,000 will qualify for a $1,200 Coronavirus check.
• President Trump says relief checks to be issued by April; however, experts predict it will be May before these checks are sent out.
• Unemployment Benefits have been expanded to cover more workers than usually eligible.

Coronavirus & Taxes: Comprehensive COVID-19 Tax Information

Have questions about how Coronavirus is affecting the tax process and when you might receive assistance? Learn more about the breaking news referenced above, and click on the links below to jump to your desired section.

• People First Initiative
• New Tax Deadline: File by July 15th
• Tax Refunds
• Filing Overdue Taxes from Previous Years
• Coronavirus Relief Bill
• New Tax Debt Plans Available
• Unemployment Benefits
• Coronavirus Tax Scams

People First Initiative

The IRS has introduced the People First Initiative, which temporarily adjusts or suspends specified compliance programs. These efforts are designed to ease the tax burden for American citizens. While the government agency plans to provide full details soon, here are some of the important highlights:

• Existing Installment Agreements – For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended.
• Field Collection Activities – Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period.
• Automated Liens and Levies – New automatic, systemic liens and levies will be suspended during this period.
• Private Debt Collection – New delinquent accounts will not be forwarded by the IRS to private collection agencies to work during this period.
• Passport Certifications to the State Department – IRS will suspend new certifications to the Department of State for taxpayers who are “seriously delinquent” during this period.
• Field, Office and Correspondence Audits – During this period, the IRS will generally not start new field, office and correspondence examinations.
• Earned Income Tax Credit and Wage Verification Reviews – Taxpayers have until July 15, 2020, to respond to the IRS to verify that they qualify for the Earned Income Tax Credit or to verify their income.

Taxes Payment Deadline Extended to July 15, 2020 due to Coronavirus

The IRS has extended the tax deadline due to the Coronavirus outbreak in order to provide relief to all American taxpayers.

• Individuals: Income tax payment deadlines for individual returns are now extended to July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and entities such as trusts or estates. This COVID-19 tax relief measure is available to all taxpayers, and you don’t need to file any additional forms to qualify.
• Corporations: For C Corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due.
  Note: This Coronavirus tax deadline extension applies to estimated tax payments for tax year 2020 that are due on April 15, 2020. Penalties and interest will start accruing on unpaid balances as of July 16, 2020.

Will Tax Refunds Be Delayed Due to Coronavirus?

No. The IRS is continuing to process tax returns and issue refunds. If you’re able to file your taxes, you should do so. Filing online is the fastest way to receive your tax refund, and the IRS says that those who file online typically receive their refunds within 21 days via direct deposit.

On March 24th, the IRS released this statement, encouraging refund filers to file as soon as possible:

“Refunds continue: If possible, don’t wait until July 15 to file if you’re owed a refund; file as soon as possible. Refunds will continue to be paid. For the quickest results, taxpayers should use e-file or Free File with direct deposit to help speed up refunds.”

If You Haven’t Filed a Tax Return for Previous Years, File Now

If you have a tax filing obligation and haven’t filed your tax return for 2019 or a previous year, take appropriate steps now. Legislation currently under debate would offer potential credits and rebates for individuals who have filed a return for 2018 and/or 2019. Taxpayers without 2018 tax filings on record could affect the arrival of stimulus checks.

There are currently over 1 million people who have yet to file tax returns for Tax Year 2016 and are still owed a refund; they must file their return by April 15, 2020, as this deadline has not been extended.

If you haven’t filed your previous tax returns, get in touch with us today. The IRS recommends non-filers “[contact] a tax professional to consider various available options since the time to receive such refunds is limited by statute. Once delinquent returns have been filed, most taxpayers have the opportunity to resolve any outstanding liabilities by entering into an Installment Agreement or an Offer in Compromise with the IRS to obtain a “Fresh Start.”

Get in touch with tax experts at Community Tax quickly. Because the IRS is dealing with local office closings, limited staff, and increased demand, wait times to talk to the IRS yourself will be lengthy. Our team can help you determine the right solution expeditiously – skip the long IRS waits.

Coronavirus Relief Bill

President Trump signed into law a bill meant to provide economic relief to Americans in response to the COVID-19 pandemic. This bill is called “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act.”

Below are some of the key takeaways from the proposed bill; learn Coronavirus relief bill details what applies to individual taxpayers and businesses.

• Small Business Interruption Loans

Small business owners struggling to maintain their team during these uncertain times may benefit from loans. Certain small businesses (with under 500 employees) may be eligible to receive a loan of up to $10 million to be used for payroll support, including costs related to family, sick, and medical leave, employee salaries, utilities, mortgage payments, and group health care benefits. Loans used to cover payroll may be forgiven if the business retains its employees through June 30, 2020.

• Suspension of Retirement Withdrawal Penalties
  

If passed, the proposed bill would allow taxpayers to withdraw “coronavirus-related” distributions of up to $100,000 from specified retirement plans. Qualifying taxpayers would also be allowed to repay their retirement plans to make up for money withdrawn to handle these Coronavirus-related expenses.

• COVID-19 Tax Relief Checks
  

In order to qualify for the Coronavirus tax relief checks, taxpayers must be working or receiving Social Security or pension income to qualify, as the check amount is tied to filed tax returns. Find answers to some of the most frequently asked questions about the Coronavirus refund checks:

• • Does everyone get a Coronavirus tax relief check?
    To be eligible for a stimulus payment from the Feds, you need to meet the following requirements:
    • You must have filed a tax return for tax year 2018, 2019 or have a 2019 Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement
    • Your AGI in 2018 (or 2019) must be below the threshold for your filing status
    • You must be a legal resident
    • You must not be claimed as a dependent on someone else’s tax return*
    • Everyone on your return must have a valid SSN
    • Please note: If a spouse or dependent(s) have an ITIN, you are ineligible for the stimulus.
    (The only exception would be if one spouse has a Social Security number or at least one spouse served in the military during the 2019 tax year.)If no 2018 tax return is filed, file a tax return for 2019 as soon as possible to receive your stimulus check.*Dependents who are claimed on someone else’s return will not receive a check, but if they are under 17 by the end of the tax year, their legal guardian will receive an additional $500.
  • What is the amount of my Coronavirus tax relief check dependent on?
    The IRS will first look at your 2019 return to determine your eligibility. If you have not filed your 2019 return, they will look at your 2018 tax return.If you aren’t up to date on your taxes, there’s still time to qualify for a stimulus check.
  • How much will I get from my Coronavirus tax relief check?
    The amount you receive will be calculated based on your adjusted gross income, as reported on your 2018 or 2019 tax return. Those filing single with an adjusted gross income of $75,000 or less will receive $1,200. Taxpayers who are married filing jointly with AGI of $150,000 or less will receive $2,400. Those filing as head of household with AGI of $112,500 or less will receive $1,200. Filers with dependents under the age of 17 at the end of the tax year will receive $500 for each dependent.If your income exceeds the thresholds indicated above, the amount will be reduced on a sliding scale and phase out at $99,000 for single filers, $198,000 for joint filers, and $136,500 for head of household filers.
  • When are the tax relief checks being mailed?
    Qualifying households could begin receiving Coronavirus refund checks soon after the measure becomes law. The government has promised to pay out these checks as rapidly as possible, but no set due date has been announced as of this writing.

New Coronavirus Tax Debt Relief Payment Plans Available

The IRS is making it easier to reduce your tax payments, especially for those taxpayers who are on payment plans to pay off tax debt of less than $250,000. You may currently qualify for new options right now that will dramatically reduce your payment amount.

Contact us to hear more about your options and the Coronavirus tax relief plans available.

Unemployment Benefits

Americans who are unemployed, are partly unemployed or cannot work for coronavirus-related reasons will be more likely to receive benefits under the expanded Coronavirus relief program. Eligible workers will get an extra $600 per week on top of their state benefit.

The Rise of Coronavirus Tax Relief Scams

Scammers are targeting taxpayers under the guise of providing COVID-19 tax relief. If you receive emails, calls, or letters claiming to be from the Treasury Department and offering grants or stimulus payments related to Coronavirus in exchange for personal information, do not respond. These scammers may also ask for advance fees, additional tax payments, or gift card purchases.

We will update this page with the latest tax-related Coronavirus information as it’s made available. Check in with IRS.gov’s Coronavirus tax updates for more.