The Treasury Department and
Internal Revenue Service announced the federal income tax filing due date is
automatically extended from April 15, 2020, to July 15, 2020. We are continuing to work and complete as
many tax returns as we can by the original filing date. For any client that does not file by April
15, 2020, your returns will be automatically extended until July 15. If you are unable to file by July 15, 2020,
we can file an extension at that time to delay your filing until October 15,
Taxpayers can defer federal
income tax payments due on April 15, 2020, to July 15, 2020, without penalties
and interest, regardless of the amount owed. This deferment applies to all
taxpayers, including individuals, trusts and estates, corporations and other
non-corporate tax filers as well as those who pay self-employment tax. If we have completed your tax return and you
owe money, you do not need to make the payment until July 15, 2020. This also
applies to the first quarter 2020 estimated tax payments. The deadline to contribute to an IRA or Roth
IRA contribution for 2019, has also been extended until July 15, 2020. You will
still have until the extended due date of your tax return to make SEP IRA and
South Carolina has adopted the
federal changes. North Carolina has also
adopted the federal changes, with the exception of one item that requires a law
change. The NCDOR does not have authority to waive interest charges on unpaid
balances. We expect updates in the coming days. If you file in a state other than NC or SC,
we are monitoring the adoption of the federal changes. Do not hesitate to email or call if you have
Our staff members are now working
remotely. Although accountants are
considered an “essential service” under the Mecklenburg County Stay-at-Home
proclamation, our office will only be open on a limited basis. Please remember to make use of our portal for
electronic transmission of documents. If
you are unable to use the portal, we will do our best to make arrangements to
have your tax returns mailed to you or schedule an appointment for pick-up.
Following President Trump’s declaration of a
national emergency, Treasury Secretary Steven Mnuchin stated at a press
conference on March 17, 2020 that individuals can defer tax payments up to $1
million for 90 days. Corporations can defer up to $10 million of tax payments
for 90 days.
The $1 million limit for individuals was
established to cover small businesses and passthrough entities, he said.
“We encourage those Americans who can
file their taxes to continue to file their taxes [by] April 15,” Mnuchin said,
especially encouraging people who will be getting tax refunds to do so.
“Just file your taxes,” he said, and “you will automatically not
get charged interest and penalties” on payments made within the 90-day
Observation: Mnuchin’s statement did not extend the tax filing due date. For individuals the filing date, generally, is April 15. But they can get an automatic extension to file till October 15 by, for example, filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
Observation: Many details remain unclear with respect to this relief, and no official written guidance has been released as of the time we went to press.
We’re aiming to keep you as up to date as possible. If you have any questions, please call us at (704) 372-1167.
As the current situation
surrounding the outbreak of the coronavirus (COVID-19) continues to evolve,
please know that the health and well-being of our clients and staff is a top
priority at Scharf Pera & Co., PLLC. While our office will remain open, we encourage
telephone conferences and e-mail communications over in-person meetings. In addition to regular mail and overnight
delivery options, we have a secure portal for electronic acceptance of
documents and delivery of tax returns and financial statements. Many of you are already making use of the
portal, but if you do not have an account and would like one, please contact
our office as soon as possible. We hope
all of these options will help protect the health of our clients and employees.
As always, we are committed to
providing you with quality, timely and efficient service. At this time, we have no updates on any
changes to the April 15th tax deadline, but we will continue to
monitor and update you. In the meantime, we will complete as many tax returns
as we can accommodate. As we have
communicated in previous years, if you have not already submitted your
documents by March 15th, we may have to file an extension for your
tax returns. We will update our website
and Facebook page with future communications.
With these unusual circumstances,
you may have questions about the tax extension process or other financial or
accounting concerns. We are available to
assist you and respond to your questions as they arise.
We wish you, your families and
employees continued good health.
In today’s tightening job market, to attract and retain the best employees, small businesses need to offer not only competitive pay, but also appealing fringe benefits. Those that are tax-free are especially attractive to employees. Examples include many types of insurance (health, disability, long-term care, life) and assistance plans (dependent care, adoption and educational), subject to certain limits. The tax treatment of some benefits, such as moving expense reimbursements and transportation benefits, has changed under the TCJA. Contact us to learn more.
Section 529 plans are a popular education-funding tool because of tax and other benefits. Two types are available: 1) prepaid tuition plans, and 2) savings plans. A prepaid tuition plan guarantees tuition regardless of its cost when the child attends the school. A savings plan can fund expenses beyond college tuition on a tax-free basis. The TCJA expands the definition of qualified expenses to generally include elementary and secondary school tuition. However, tax-free distributions used for such tuition are limited to $10,000 per year. Contact us with questions.
Have you recently started a new business or are you contemplating starting one? Keep in mind that not all start-up expenses can be deducted on your federal tax return right away. Some expenses probably must be amortized over time. You might be able to make an election to deduct up to $5,000 currently, but the deduction is reduced by the amount by which your total start-up costs exceed $50,000. You can also deduct $5,000 of the organizational costs of creating a corporation or partnership. Contact us. We can help you maximize deductions for a start-up business.
The rules for writing off personal casualty losses on a tax return have changed for 2018 to 2025. Specifically, taxpayers generally can’t deduct losses unless the casualty event qualifies as a federally declared disaster. (The rules for business or income-producing property are different.) Another factor that now makes it harder to claim a casualty loss is that you must itemize deductions to claim one. For 2018 to 2025, fewer people will itemize, because the standard deduction amounts have been significantly increased. We can help you navigate the complex rules.
Financial statements present a company’s financial position as of a specific date. But some events happen after the cutoff date that have financial implications for the prior period or the future. Subsequent events that provide further evidence of conditions that existed on the financial statement date must be recorded. Other unforeseeable events may be disclosed in the footnotes to keep the financial statements from being misleading. Contact us to help determine the appropriate accounting treatment for these types of events.