LaPorte is closely following guidance from a variety of sources including the IRS and the SBA. Following are important updates related to COVID-19.
Paycheck Protection Program
On April 14, 2020 the SBA issued new guidance regarding the Paycheck Protection Program (PPP). These new rules essentially apply to individuals with self-employment income who file a Form 1040, Schedule C. This new guidance also provides that self-employed “general active partners” should be included in the payroll costs of the partnership, rather than the partner applying for a PPP loan on their own. The guidance also provides guidance on the following for self-employed individuals:
- How to calculate the maximum loan amount;
- How the PPP loan proceeds can be used by self-employed individuals;
- Restrictions on how the PPP loan proceeds can be used;
- How the loan forgiveness will be determined; and
- What documentation will be required by the lender.
Nonprofits
The IRS has extended the due date of nonprofit returns to July 15th. For more information, including a complete list of affected forms, tax payments, and other time-sensitive actions, please visit Notice 2020-23 and Rev. Proc. 2018-58.
Individuals
Notice 2020-23 also expands this relief to additional returns, tax payments and other actions. As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. Under this guidance, everyone, including Americans who live and work abroad, can now wait until July 15 to file their 2019 federal income tax return and pay any tax due.
IRA Contributions
Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. For most people, this means that contributions for 2019 must be made by July 15, 2020.
Individuals and Businesses
Extension of time to file beyond July 15
Individual taxpayers who need additional time to file beyond the July 15 deadline can request an extension to Oct. 15, 2020, by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses who need additional time must file Form 7004. An extension to file is not an extension to pay any taxes owed. Taxpayers requesting additional time to file should estimate their tax liability and pay any taxes owed by the July 15, 2020, deadline to avoid additional interest and penalties.
Estimated Tax Payments
Besides the April 15 estimated tax payment previously extended, today’s notice also extends relief to estimated tax payments due June 15, 2020. This means that any individual or corporation that has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.
For more information about how this guidance will affect your unique situation, please reach out to a LaPorte professional.