Tag Archives: Care Act

Federal Income Tax Filing Reminder – Tax Delay Q and A – State Income Taxes With Complications

Today was the scheduled regular Tax filing date. Thankfully the Federal Government, on March 21, 2020 announced we all have received a 90 day delay on our REGULAR Federal Income tax…

From the IRS announcement

“Taxpayers can also 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 you have a refund and made less or the same in 2018 as 2019, then you can file. As a planning reminder… about 90% of the population is to receive a Recovery Rebate of $1200 + $500 per child under age 17… BUT those are phased out…

The applicable AGI phase out threshold amounts are as follows:

  • Married Joint: $150,000
  • Head of Household: $112,500
  • All Other Filers: $75,000

CARES-Act-Economic-Relief-Proposed-Taxpayers-Refundable-Tax-Credits

If you are in the phase out range and if you have not filed your 2019 return, check to see which is lower, your 2018 or 2019, and if your 2018 is lower, do not file your 2019. Conversely, if your 2019 is lower file it immediately! You likely will not have to pay until the extended deadline of July 15, 2020 (Double check with your Tax Professional!)

Back to the Regular Extension Update

This nice Q and A from Turbo Tax

  • Do I need to file an extension to file past April 15?  No, you do not need to take any action. The July 15 extension applies to all taxpayers automatically.
  • Will the extension of the tax deadline delay my tax refund? No, the IRS expects to continue to process refunds as normal but encourages all taxpayers to file now.
  • Do I have more time to contribute to my IRA? Yes, you now have until July 15, to make a 2019 contribution to your IRA.
  • Will the deadline for my state taxes also be extended? A majority of states are conforming to the new July 15 tax deadline. However, some states have different deadlines and guidance. To find out the deadline in your state, click here

States with Challenging Time Frames at this time

Most all states but the following are either non state income tax states or are following the same extension date ….(no idea why any state would not follow the rest of the country … digressing)

Hawaii July 20
Idaho June 15
Iowa July 31
Mississippi May 15
New Hampshire June 15
Virginia May 1 to file; June 1 to pay

From AICPA for more exact information.

Again … especially when dealing with the state information, this is changing quickly and may change again, so please check your respective state taxing authority.

Bottom line most have some type of relief, although the calendar complicates in certain states!

Have a Great “Updated Tax Extension Reminder” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

SPECIAL CARE ACT EDITION – PLEASE SHARE – Q 2 2020 Newsletter Video Audio Podcast Review By John Kvale

Click Here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Break In : If you don’t have a Twitter account, the time is now – many of the CARE ACT services are crashing their regular sites, as such communication is being made via Twitter … If you REALLY do not want a Twitter account, just use it as a browser, however by having an account you can subscribe to whatever entity you need to follow and you will be notified immediately as they comment.

This is also useful for following your industry organization, important company or almost anything you may need immediate notification.

 

Let’s get going!

Just so you know this was hurried with a call before and just after this video, so it was not edited as normal … but wanted to get this out to as many as possible as fast as possible… Never claimed to be a Spielberg .. haha … prompt, complete delivery of this information was very important at the moment!

Thanks in advance!

Q 2 2020 Newsletter

 

The CARE ACT –

On Friday March 27th 2020, a stimulus package was passed into law for the benefit of those being effected by the Corona Virus officially starting the clock for many programs.

The general spirit of the most important parts of the bill is getting money into the hands of consumers quickly AND attempting to incentivize employers to keep workers on the payroll!

Recovery Rebate

Checks Being Sent to Over 90% of the population

Each person to receive $1200, kids UNDER age 17 credited to parents at $500 each, no limit in headcount.

This Rebate is NOT TAXABLE!

The payout is likely to be sent out end of April or early May!

The applicable AGI phase out threshold amounts are as follows:

  • Married Joint: $150,000
  • Head of Household: $112,500
  • All Other Filers: $75,000

One time Maximum $100k IRA Distribution Available in 2020 Only

Investors affected by the Corona Virus can take a maximum of $100k of a Corona Virus impacted distribution from your IRA or Employer related plans.

  • There will be no 10% penalty for the withdrawal.
  • There will also be no 20% mandatory withholding.
  • You must take this distribution by 12-31-20.

You can repay this distribution within three years and have NO TAXES. You may stagger payback contributions over any time frame as long as you pay all of it back within three years of the day you received the distribution in order not to have taxes due on the distribution.

RMD’s (Required Minimum Distributions) Waived in 2020

All RMD’s for any and all mandatory plans are waived as of 2020.

This includes all types of RMD’s including those with the five year rule.

Next year will not mandate a doubling of the RMD.

Next years RMD will be on the higher mandated level, but again will not cause a duplicate.

One Off Charitable Deduction – Small – Available Only to Non Itemizers

Included in the new Coronal Stimulus package is a one time above the line, Charitable Donation Write off of $300.

This amount is only available to those who do not itemize.

Pandemic Unemployment Insurance Benefit

A New Pandemic Unemployment Benefit available to those effected by the Corona Virus.

This benefit is additionally available to those that may not have had access before, mainly self-employed individuals.

This new benefit is $600/week and lasts for four months.

There is also the elimination of the first week waiting period, allowing those immediate access if needed.

Student Loan Deferral

No payments required until September 30th of 2020!

No interest will accrue during the interim.

Must notify your loan provider if you are on automatic payment.

Paycheck Protection Program – AKA SBA Loan Program

Forgiveness loan that can be totally FREE to small business owners if they qualify and use the funds appropriately. If not, they will receive a possible 10 year term, 4% maximum interest rate from the Small Business Association, happily administered by qualified local banks in an attempt to speed the process of getting the loans to business owners.

The purpose of this loan is too keep your people employed!

Available for business owners of less than 500 people who were or have been adversely affected by the Corona Virus.

Must certify Good Faith that the business has been affected by the Virus. Which can include uncertainty of the future.

Must be applied for by June 30, 2020!

Repayments will not commence until at least six months and no longer than twelve months.

Loan amount is the lesser of $10 mllion or 2.5 times your average monthly payroll in 2019 – EXCLUDING AMOUNTS OVER $100K ANNUALLY

Capital Market Update –

Bonds are so good they are Bad

Given the speed of the equity stock, drop due to the ever expanding Coronavirus. Investors were caught flat-footed and in a dash for cash, sold their old faithful bond holdings which are viewed favorably again due to their safety.

Using history as our guide, not only does this correct itself, but also likely turns out to go even higher in value, which is what happens when rates go down and bonds go up.

In closing, one more bit of good news in almost all cases we will have reinvestment of income at these lower prices, taking advantage of that pricing for our own benefit.

2-26-20 VBMFX - Largest Bond Fund in World

We hope you enjoy … talk to you in the Summer !!!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

CARE ACT UPDATED INFORMATION (Please Share, Especially With Self Employed Solo Displaced Business Owners of All Types) – “The “PPP” PART 2 UPDATE Paycheck Protection Plan!”

In an attempt to get this to you ASAP we are relying on available information, IT IS CHANGING FAST, but the PPP Plan for now, is a first come, first served basis! You may want to act quickly.

Break In : If you don’t have a Twitter account, the time is now – many of the CARE ACT services are crashing their regular sites, as such communication is being made via Twitter … If you REALLY do not want a Twitter account, just use it as a browser, however by having an account you can subscribe to whatever entity you need to follow and you will be notified immediately as they comment.

BREAK IN: Your local bank will likely be able to accept an application FRIDAY APRIL 10, we would suggest you contact your bank about this plan immediately as Friday is a Holiday for many!

The following is most fitting for an Self Employed Employer or Solo Practitioner who has been displaced!

The Care Act was signed into law on Friday, March 27, 2020 and includes a provision for Employers to extend workers pay and possibly NOT REPAY!

The “PPP” Paycheck Protection Plan

BREAK IN: Using Texas as our template the Pandemic Unemployment funds are not being delivered yet as there are too many regular Unemployment requests in front of the plan.

BREAK IN: There is some dialogue that if you have ANY income you may not be able to use the Pandemic Unemployment funds and you may not be able to use both the funds at the same time – This PPP Plan for Solo or Self Employed is likely a faster and better solution at this time.

Forgiveness loan that can be totally FREE to business owners if they qualify and use the funds appropriately. If not, they will receive a UPDATED TERMS 2 year term, 1% interest rate from the Small Business Association, happily administered by qualified local banks in an attempt to speed the process of getting the loans to business owners.

The purpose of this loan is too pay your salary and other expenses…see below.

Available for solo owners of less than 500 people who were or have been adversely affected by the Corona Virus.

Must certify Good Faith that the business has been affected by the Virus. Which can include uncertainty of the future.

Must be applied for by June 30, 2020!

Repayments will not commence  UPDATED : IN SIX MONTHS!

Loan amount is the lesser of $10 mllion or 2.5 times your average monthly payroll in 2019 – EXCLUDING AMOUNTS OVER $100K ANNUALLY

IF the entire loan is used completely within eight weeks and is used for any of the following:

  • Payroll costs
  • health insurance premiums and other healthcare costs
  • Salary and net income from business
  • Rent
  • Mortgage interest (excluding amounts pre-paid)
  • Utilities
  • Other business interest incurred prior to February 15, 2020

It may be completely forgiven (NO TAXES IN ANY WAY OR PAY BACK AS WE KNOW OF NOW) if the practitioner meets the following employee limits:

  1. The business must maintain the same number of employees (equivalents) from February 15, 2020 through June 30, 2020 as it did during either the same period in 2019 or
  2. from January 1, 2020 until February 15, 2020. To the extent this requirement is not met, the amount eligible for forgiveness will be reduced, ratably.

You may not cut any employees <$100k annually by more than 25% or they will not count towards the above headcount.

Again this information is changing quickly, so be sure to confirm with you Banker his comprehension of this!

Have a Great “PPP Solo Plan” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

CARE ACT Review (Please Share, Especially With Displaced Business Owners of All Types) – “The “PPP” Paycheck Protection Plan!” Expected to be Over Subscribed …

The following is most fitting for an Employer who has been displaced!

The Care Act was signed into law on Friday, March 27, 2020 and includes a provision for Employers to extend workers pay and possibly NOT REPAY!

The “PPP” Paycheck Protection Plan

BREAK IN: Some legislatures are expecting this to be over subscribed i.e. Run out of money – do not hesitate! 

BREAK IN: Your local bank will likely be able to accept an application TOMORROW, FRIDAY APRIL 3!

Here is a link to a sample application on the SBA website, and Here is a link  to the form saved here on our blog in case the site is down.

Forgiveness loan that can be totally FREE to small business owners if they qualify and use the funds appropriately. If not, they will receive a possible 10 year term, 4% maximum interest rate from the Small Business Association, happily administered by qualified local banks in an attempt to speed the process of getting the loans to business owners.

The purpose of this loan is too keep your people employed!

Available for business owners of less than 500 people who were or have been adversely affected by the Corona Virus.

Must certify Good Faith that the business has been affected by the Virus. Which can include uncertainty of the future.

Must be applied for by June 30, 2020!

Repayments will not commence until at least six months and no longer than twelve months.

Loan amount is the lesser of $10 mllion or 2.5 times your average monthly payroll in 2019 – EXCLUDING AMOUNTS OVER $100K ANNUALLY

IF the entire loan is used completely within eight weeks and is used for any of the following:

  • Payroll costs
  • Group health insurance premiums and other healthcare costs
  • Salaries and/or commissions
  • Rent
  • Mortgage interest (excluding amounts pre-paid)
  • Utilities
  • Other business interest incurred prior to February 15, 2020

It may be completely forgiven (NO TAXES IN ANY WAY OR PAY BACK) if the employer meets the following employee limits:

  1. The business must maintain the same number of employees (equivalents) from February 15, 2020 through June 30, 2020 as it did during either the same period in 2019 or
  2. from January 1, 2020 until February 15, 2020. To the extent this requirement is not met, the amount eligible for forgiveness will be reduced, ratably.

You may not cut any employees <$100k annually by more than 25% or they will not count towards the above headcount.

Have a Great “Payroll Protection Plan” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

CARE ACT Review (Please Share, Especially With Individuals Taking or Who May Think They Have to Take RMD’s) – “RMD Required Minimum Distributions Waived in 2020!”

The following is most fitting for someone who may have taken RMD’s in the past, or think they may have to start this year!

The Care Act was signed into law on Friday, March 27, 2020 and includes a provision Waiving ALL RMD’s for the year 2020.

Required Minimum Distributions (RMD’s) Waived in 2020

All RMD’s for any and all mandatory plans are waived as of 2020.

This includes all types of RMD’s including those with the five year rule.

Next year will not mandate a doubling or catch up of the RMD.

Next years RMD will be on the higher mandated level, but again will not cause a duplicate/catch up.

Planning Tip:

Just because you do not have to take your RMD, does not mean you necessarily need to stop. Those taking regular monthly distributions may continue to do so. Those with larger pools of IRA type of assets may want to continue to do so, maximizing current income tax brackets. Those having no need or desire to take their RMD may want to happily skip this year!

Have a Great “Waived RMD” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

CARE ACT Review (Please Share, Especially With Displaced Self Employed) – “The Pandemic Unemployment Insurance!”

The following is most fitting for someone displaced who is self employed!

Examples Include: Massage Therapist, Sports Instructors, Solo Medical Practitioners 

The Care Act was signed into law on Friday, March 27, 2020 and includes a provision called The Pandemic Unemployment Benefit – specifically for The Self Employed.

The Pandemic Unemployment Benefit

BREAK IN: At the time of writing this post, the Dallas Fort Worth Area are NOT allowing enrollment to this benefit at your local office as they are directing all to the Texas Website. Not surprisingly, they are very busy and the site is even having functioning problems. 

BREAK IN UPDATE :  It appears Texas is not ready yet and they are asking you to sign up for email notification…. Those in other states, suggest you check your states Twitter Feed for similar instructions!

img_6403

A New Pandemic Unemployment Benefit available to those effected by the Corona Virus.

This benefit is additionally available to those that may not have had access before, mainly self-employed individuals. (Normally Self Employed are not eligible for ANY type of Unemployment benefit.

This new benefit is $600/week and lasts for four months or until your displacement is over, whichever occurs first.

There is also the elimination of the first week waiting period, allowing those immediate access if needed.

Individuals already receiving Unemployment benefits will begin receiving this additional benefit with no offset of their prior benefit occurring effectively making this a complete bonus benefit.

This is a Federally backstopped program that is administered by each State, so the state will issue these benefits and there will be variances among different states.

Have a Great “Pandemic Insurance Benefit” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

CARE ACT Review (Please Share, Especially with Someone You Know Who May Have Recently Moved) – “The Recovery Rebate!” – IMPORTANT *Update Your Address if You Recently Moved*

This is the first of a Multiple Part Series (4 or 5) on the CARE ACT … done in order of most touched by the bill. Due to the unique nature of the bill, (Far Reaching, Confusing, but needing expedited delivery and explanation), I am asking you share this with those that may be in need or find it helpful by pushing it forward to others via email.

The following is most fitting for someone you know that may have recently moved!

Over 90% of US tax payers will receive the following Recovery Rebate,making backlog and loss certain, the more streamlined we can be, the more help that will occur. 

The Care Act was signed into law on Friday, March 27, 2020 and includes a provision called the Recovery Rebate.

Break In : If you have moved or changed your bank account since your most recent Tax filing you need to file FORM 8822 to notify the IRS of your correct address.

The Recovery Rebate – Estimated 90% of Tax Payer Participation

Each person to receive $1200, kids UNDER age 17 credited to parents at $500 each, no limit in headcount.

This Rebate is NOT TAXABLE!

The payout is likely to be sent out end of April or early May!

Social Security recipients will receive theirs via their direct deposit account. Non Social Security recipients will receive their Rebate via the last known account on either your 2018 or 2019 tax return, whichever is more recent or directly to the address on file.

A letter will be sent to the last known address of your most recent tax return hopefully within two weeks of the bills signing with instructions on your calculation AND how the US Government intends to send you the rebate.

If you have moved recently or after you most recent tax filing date, YOU SHOULD FILE FORM 8822 ASAP for the IRS to update your address or you will likely not receive the notification letter, far complicating an already complicated situation.

Phase out

The applicable AGI phase out threshold amounts are as follows:

  • Married Joint: $150,000
  • Head of Household: $112,500
  • All Other Filers: $75,000

This phase out is based on either your 2018 or 2019 tax return, whichever is most recent. If your income exceeds the threshold and you are phased out completely, and your 2020 income is below the threshold when you file your 2020 tax return, you will receive your Recovery Rebate at the time of your 2020 filing.

Should your 2020 income rise above the thresholds but based on your prior years income you received the Rebate, YOU GET TO KEEP THE REBATE WITHOUT PENALTY OR TAX!

Planning Tip for those near or in the Phase Out Thresholds

If you have not filed your 2019 return, check to see which is lower, your 2018 or 2019, and if your 2018 is lower, do not file your 2019. Conversely, if your 2019 is lower file it immediately! You likely will not have to pay until the extended deadline of July 15, 2020 (Double check with your Tax Professional!)

CARES-Act-Economic-Relief-Proposed-Taxpayers-Refundable-Tax-Credits

Have a Great “Recovery Rebate” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents