Update: Illinois Delays Tax Deadline & CARE Act Implications
April 3, 2020
There have been a lot of changes in the past couple of weeks that could impact decisions you make regarding your taxes and tax returns. In order to keep you up to date, we share the following topics which might impact you.
Remember that we cannot offer tax advice and you should discuss your specific concerns with your accountant. Should you be concerned about a tax return being completed by ATG Trust Company's accountants, contact us and we will be happy to help.
If you have any questions for us, we are here for you. Contact us today.
Illinois Income Tax Filing and Payment Extension: What Does This News Mean for You?
The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their Illinois income taxes on April 15, 2020, are automatically extended until July 15, 2020. This relief applies to all individual returns, trusts, and corporations. Taxpayers do not need to file any additional forms or call Illinois Department of Revenue (IDOR) to qualify.
Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. You will automatically avoid interest and penalties on the taxes paid by July 15, 2020.
Even though the deadline has been extended, IDOR encourages taxpayers expecting a refund to file as soon as they can.
ATG Trust Company continues to work towards having tax returns completed by April 15, 2020 for our accounts and clients. As soon as tax forms are complete, they are released to the appropriate parties.
How the CARES Act Impacts Individual Retirement Accounts
"The President signed the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), which is aimed to provide financial relief for the economic downturn caused by the Coronavirus pandemic. The bill will inject $2 trillion into the American economy, and includes a range of tax rebates, expanded unemployment benefits and a variety of business tax-relief provisions designed to bolster individual, family and business finances."
Required Minimum Distributions
The CARES Act suspends RMDs for 2020.
IRA Contribution Deadline
The deadline for filing an individual's 2019 income tax return is extended to July 15, 2020. In an FAQ, the IRS stated "Contributions can be made to your IRA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020."
Withdrawals from Qualified Retirement Plans and IRAs, and Plan Loans
The CARES Act provides tax relief for retirement plan and IRA "coronavirus-related distributions" up to $100,000 taken by individuals on or after January 1, 2020 and before December 31, 2020.
The CARES Act permits in-service distributions, provides an exception to the 10% early distribution penalty, exempts the distribution from the mandatory 20% withholding applicable to eligible rollover distributions, allows the individual to include income attributable to the distribution over a three-year period, and allows for the recontribution of the distribution to a plan or IRA within three years.
The CARES Act provides that for plan loans made during the 180-day period beginning on the date of enactment and December 31, 2020 the maximum loan amount is increased from $50,000 or 50% of the vested account balance to $100,000 or 100% of the vested account balance. The due date for any repayment on a loan is delayed for one year (normally five years).
To be eligible for the withdrawal and loan relief, an individual must fall within one of the following categories:
- The individual is diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention; or
- The individual's spouse or dependent is diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention; or
- The individual experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to COVID-19, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Secretary of the Treasury.
Plan administrators may rely on an employee's certification that the employee meets these requirements. For the purposes of the distribution however, there is no such provision in the loan rule change.
If you have any questions about your individual retirement account contact us today.