The CARES Act is loaded with nearly 900 pages of information. Below is what we believe to be the most significant to our clients.

Stimulus Payments

The CARES Act provides for stimulus payments of up to $1,200 for each individual and $500 for each child under age 17. Stimulus payments are not available to those without an SSN, nonresident aliens, or adult dependents.

This stimulus payment is technically a tax year 2020 refundable tax credit that the government is issuing early. If your stimulus payment is reduced because of income limits in 2018 or 2019, but your income is lower in 2020 because of layoffs, reduced hours, and closed businesses, you will receive a credit for the difference on your 2020 tax return. There is a no claw back provision, which means that if you receive too much of an advanced payment, you do not have to pay back the excess.

Single filers with adjusted gross income (AGI) up to $75,000 a year are eligible for the full $1,200 payment. The payment is reduced by $5 for every $100 in income above $75,000. The payment amount is entirely phased out at an AGI of $99,000. Single filers will receive an additional $500 for every dependent child under 17.

Married filers with AGIs up to $150,000 a year are eligible for a $2,400 payment. The payment is reduced by $5 for every $100 in income above $150,000. The payment amount is entirely phased out at an AGI of $198,000 (if the taxpayers have no dependent children). Married filers will receive an additional $500 for every dependent child under 17.

Head of household filers with AGIs up to $112,500 a year are eligible for the full $1,200 payment and an additional payment of $500 for each dependent child under age 17. The payment is reduced by $5 for every $100 in income above $112,500. Head of household taxpayers will also receive an additional $500 per dependent child under age 17. With no eligible children, a head of household filer is phased out at AGI of $137,000. With one eligible dependent child, a head of household filer is entirely phased out of the rebate payment at AGI of $146,400. Head of household filers will receive an additional $500 for every dependent child under 17.

If your income is above the threshold amounts, a reduced payment will result. The reduced amount using your own income (AGI) can easily be calculated using the Washington Post calculator.

There is nothing you need to do to get your stimulus check. If you received a refund on your most recently filed tax return and had the refund direct deposited into your bank account, the IRS will deposit the calculated amount directly into your bank account using your bank information from that tax return. If there is no bank information on the tax return, the IRS will issue you a paper check.

The IRS says that if direct deposit is used, you can expect to see the funds in your bank account in about 3 weeks. Checks should arrive in 6-8 weeks. We would not be surprised at all if these stimulus payments take longer to get issued than originally anticipated as the IRS is currently operating at a limited capacity.

Retirement Accounts

The IRS is waiving early withdrawal penalties (usually 10%) for up to $100K in COVID-19-related withdrawals in 2020 from qualified retirement accounts. The withdrawals must be paid back or included ratably in income over the three years following the withdrawal.  This exception applies only to COVID-19 related withdrawals. You qualify if you tested positive, a spouse or dependent tested positive, or you experienced a variety of other negative economic consequences related to the pandemic.

The IRS is also doubling the amount that taxpayers can borrow from certain qualified retirement accounts from $50,000 to $100,000. This provision is only active for 180 days after the CARES Act passed.

There are no required minimum distributions (RMDs) for 2020 from any retirement account. This is to protect taxpayers from being forced to sell investments that may have fallen in value, creating losses. You can still take your RMD as you have in the past, but you can also opt out of this if you do not need the money now and would prefer to let the investment sit and potentially recover.

Charitable Contributions

The IRS is allowing an above-the-line deduction of up to $300 in charitable contributions for taxpayers who do not itemize their deductions in 2020. Note that these charitable contributions must still be a qualified 501(C)3 non-profit.

The IRS is removing the adjusted gross income limit on itemized deductions for charitable contributions claimed on personal tax returns for 2020.

Other Miscellaneous

The IRS has permanently restored the ability for taxpayers to use their health savings accounts and flexible spending arrangements to purchase over-the-counter medicine. This now includes menstrual products after 15 years of lobbying and debate.

Taxpayers can now exclude employer student loan repayment assistance of up to $5,250 from income in 2020.

The IRS had already waived two months of student loan payments for any federal student loan borrowers. The CARES Act expanded this until September 30, 2020 for any student loan held by the federal government. You will need to contact your loan servicer to ensure that their billing system has been reset. Interest should not accrue during this suspension.

Unemployment benefits have been expanded to include far more workers than are usually eligible, including self-employed people and part-time workers. Under the CARES Act, eligible workers will get an extra $600 per week on top of their state benefit. Workers excluded from these benefits include those who can work from home, those receiving paid sick leave or paid family leave, and those who are newly entering the workforce and are unable to find a job.

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IRS

The newest details since our last email include the following:

• If you need additional time beyond the July 15 deadline to file your 2019 tax returns, an extension of time to file must be submitted by July 15, 2020. This extension, if requested, extends the time to file until October 15, 2020 (not January 2021 as the six-month extension name implies).
• First quarter 2020 estimates are extended to July 15, 2020; however, second quarter payments are not extended at this time. This means Quarter 2 is due before Quarter 1. If you have already received 2020 estimated tax vouchers from us, you will need to update the due dates on the instructions we have provided to you. The following are currently the due dates for federal 2020 quarterly estimated taxes:

• Quarter 1: Due July 15, 2020
• Quarter 2: Due June 15, 2020 ßnote: this is due prior to quarter 1
• Quarter 3: Due September 15, 2020
• Quarter 4: Due January 15, 2021

• Contributions to Health Savings Accounts and IRAs have been extended to July 15, 2020, for the 2019 tax year.
• If you have excess elective deferrals (meaning you contributed more than an allowable amount to a retirement account), the excess must still be withdrawn by April 15, 2020, to avoid penalties.
• Normal filing, payment, and deposit due dates continue to apply for both payroll and excise taxes.
• Normal filing and payment due dates still apply to estate and gift taxes.
• Refund requests for 2016 must still be filed by April 15, 2020, or the statute of limitations will prevent you from receiving any refunds you may have been entitled to.
• Existing Installment Agreements: For taxpayers under an existing Installment Agreement, payments due between April 1, 2020, and July 15, 2020, are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.
• New Installment Agreements: The IRS reminds people unable to fully pay their federal taxes that they can resolve outstanding liabilities by entering into a monthly payment agreement with the IRS. See www.IRS.gov for further information.
• Offers in Compromise (OIC): Pending OIC applications will have until July 15, 2020, to provide additional supporting information. Payments on accepted OICs may be suspended until July 15, 2020.

• Liens and levies initiated by field revenue officers will generally be suspended and new automated liens and levies are suspended.
• Generally, IRS will not initiate new field, office, and correspondence audits.
• Earned income tax credit and wage verification reviews have until July 15, 2020.
• The Office of Appeals will continue to hear appeals over the telephone or by video conferencing.
• IRS will continue to take steps where necessary to protect all applicable statutes of limitations.

Oregon

At the direction of Governor Kate Brown, a Director’s Order was issued on March 25, 2020, which states that:

• Tax filing and tax payments have been extended to July 15, 2020, to coincide with the IRS. This includes Tri-County Metropolitan tax. The tax year 2019 six-month extension to file, if requested, continues to extend only the filing deadline until October 15, 2020 (not January 15, 2020 as a six-month extension implies).
• If you will owe Oregon personal income tax for 2019, an Oregon personal income tax extension for 2019 is required along with making an extension payment by July 15, 2020 to avoid interest and penalties when you file your return. We are available to perform an estimated tax payment calculation at your request should the need arise. Our office must receive your request for an estimated extension tax payment no later than June 15, 2020. Additional time spent by our office to apply for an extension or to calculate an estimated tax payment will impact total fees charged for the tax return preparation.

• Oregon quarterly estimated tax payments for 2020 are not extended. The following are currently the due dates for Oregon 2020 quarterly estimated taxes:

• Quarter 1: Due April 15, 2020
• Quarter 2: Due June 15, 2020
• Quarter 3: Due September 15, 2020
• Quarter 4: Due January 15, 2021

• The Director’s Order does not apply to payroll, excise taxes, or estate transfer taxes. Normal filing, payment, and deposit due dates continue to apply.
• The Director’s Order does not apply to the filing of information returns.
• The Director’s Order does not apply to marijuana taxes.

• If you have already filed your 2019 Oregon income tax return and scheduled a payment of taxes by April 15, 2020, the payment will not automatically be rescheduled. If you do nothing, the payment will be made on the date you chose. If you would like to reschedule the payment, you will need to do this through your Revenue Online account, which can be found at www.oregon.gov/dor. If you scheduled your payment through your bank’s bill pay, you will need to change to payment date through your bank. All changes must be made within five business days before the payment is scheduled to be made.
• Refund requests for 2016 must still be filed by April 15, 2020 or the statute of limitations will prevent you from receiving any refunds you may have been entitled to.
• The first estimated tax payment for the CAT (Corporate Activity Tax) is still due April 30, 2020. Due to the existing circumstances with the economy, the department has noted that they will not assess underpayment penalties for taxpayers making a good-faith effort to estimate their first quarter CAT payments.

City of Portland

• The Portland Arts Tax payment is extended to July 15, 2020.
• The Revenue Division is automatically extending the Portland and Multnomah County business tax return filings due on April 15, 2020 until July 15, 2020.
• For C-Corporations that have a May 15, 2020 deadline with the State of Oregon, the deadline for the Portland and Multnomah County business tax return filings due on May 15, 2020 is also extended until July 15, 2020. Tax returns due after April 15, 2020 (or May 15, 2020 for C-Corporations) are not extended at this time.
• The Revenue Division is automatically extending the tax payment deadline for Portland and Multnomah County business tax payments due with the 2019 tax year return due on April 15, 2020 until July 15, 2020.
• For C-Corporations that have a May 15, 2020 tax payment deadline with the State of Oregon, the deadline for Portland and Multnomah County business tax payments due with the 2019 tax year return due on May 15, 2020 is also extended until July 15, 2020. 2019 tax payments due with returns due after April 15, 2020 (or May 15, 2020 for C-Corporations) are not extended at this time.
• City of Portland quarterly estimated tax payments for 2020 are not extended. The following are currently the due dates for City of Portland 2020 quarterly estimated taxes:

• Quarter 1: Due April 15, 2020
• Quarter 2: Due June 15, 2020
• Quarter 3: Due September 15, 2020
• Quarter 4: Due January 15, 2021

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