Dear clients and friends,
As I sit here at home today thinking about how much I wish things were back to normal, I remind myself that usually today, April 15th, would be tax day. As many of you know, (and perhaps some of you do not), tax day has been postponed, just like everything else in our lives. The new income tax filing date is now July 15th, and this applies to both federal and New York income tax returns. Note, however, that anyone expecting a tax refund should file their returns sooner than later.
Likewise, the gift tax return filing date has been extended from April 15th to July 15th.
You should also be aware of some tax changes regarding your retirement plans, like your IRAs, 401ks and 403bs. The most significant change is that all Required Minimum Distributions (RMDs) for 2020 have been waived. If you did take an RMD within the last 60 days, you may wish to return it. This new tax relief also covers RMDs from inherited IRAs.
Caution for our clients receiving Medicaid: This RMD waiver only relates to income tax rules, and does not affect the distribution requirements for those receiving home care or nursing home Medicaid.
In addition, if you are under the age of 59 1/2, an early withdrawal would normally result in a tax penalty, however, the penalty is now waived on the first $100,000 withdrawn if you or an immediate family member have been diagnosed with Coronavirus or have experienced financial hardship due to the pandemic. Any taxes incurred on the withdrawal would still need to be paid in the usual manner.
Furthermore, the cap on 401(k) loans has also been increased from $50,000 to $100,000 if the loan is Covid-19 related.
I hope this helps.
Please forward this email to your friends and relatives.
As always, please send me your questions. If you are thinking about it, others are thinking about it too, so my answers will no doubt help you and many others.
Let’s stay connected.
LISTEN TO LAWRENCE