Covid-19

IRS extends Economic Impact Payment registration deadline for non-filers to Nov. 21

The deadline to register for an Economic Impact Payment using the Non-Filers tool is extended to November 21, 2020.

The IRS urges people who don’t typically file a tax return – and haven’t received an Economic Impact Payment – to register as quickly as possible using the Non-Filers: Enter Info Here tool on IRS.gov. The tool will not be available after November 21.

This additional time is solely for those who haven’t registered or received their EIP and don’t normally file a tax return. For taxpayers who requested an extension of time to file their 2019 tax return, that deadline is Thursday, October 15.

Most eligible U.S. taxpayers automatically received their Economic Impact Payment. Others who don’t have a filing obligation need to use the Non-Filers tool to register with the IRS to get up to $1,200. Typically, this includes people who receive little or no income.

The Non-Filers tool is secure. It is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This includes couples and individuals who are experiencing homelessness.

Anyone using the Non-Filers tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.

Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov.

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Here’s how to get the status of an Economic Impact Payment

Eligible individuals can visit IRS.gov and use the Get My Payment tool to find out the status of their Economic Impact Payment. This tool will show if a payment has been issued and whether the payment was direct deposited or sent by mail.

In certain situations, this tool will also give people the option of providing their bank account information to receive their payment by direct deposit. Information is updated once a day, usually overnight, so there’s no need to check it more than once a day.

Here are some key things to know about this tool and who can use it.

• Before using the tool, people must verify their identity by answering security questions.
• If the answers do not match IRS records after multiple attempts, the user will be locked out of the tool for 24 hours. This is for security reasons. Those who can’t verify their identity won’t be able to use Get My Payment. If this happens, people should not contact the IRS.
• If the tool returns a message of “payment status not available,” this may mean the IRS can’t determine the person’s eligibility for a payment right now. There are several reasons this could happen. Two common reasons are:
o A 2018 or 2019 tax return is not on file and the agency needs more information or,
o The individual could be claimed as a dependent on someone else’s tax return.
• In some cases, if a taxpayer has filed their 2019 tax return but the IRS hasn’t processed it yet, they may receive “payment status not available.” Taxpayers who’ve already filed a tax return don’t need to take any action. The IRS continues to issue Economic Impact Payments as tax returns are processed.
• People who aren’t required to file a tax return and used the Non-Filers: Enter Payment Info Here tool to register for a payment can check the status of their payment using the Get My Payment tool. These individuals should wait two weeks after submitting their information. If they’re required to file a 2019 tax return and they used the Non-Filer tool, this may delay processing their tax return and their Economic Impact Payment.
• Recipients of SSA-1099, RRB-1099, SSI or VA benefits may not have filed a return or used the Non-Filer tool. These people can check Get My Payment for the status of their payment, if they can verify their identity. If a benefit recipient has not received their payment, the IRS might need more information. If these individuals can’t be claimed as a dependent and aren’t required to file a tax return, they should use the Non-filer tool to register for a payment.
• Most individuals receive only one payment, but there are some situations where they may receive an additional payment. This includes certain federal benefit recipients of Social Security, SSI, RRB or VA who may receive a catch-up $500 payment for each qualifying child. Get My Payment will show the status of their most recent payment.

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IRS: New law provides relief for eligible taxpayers who need funds from IRAs and other retirement plans

WASHINGTON − The Internal Revenue Service provided a reminder today that the Coronavirus Aid, Relief, and Economic Security (CARES) Act can help eligible taxpayers in need by providing favorable tax treatment for withdrawals from retirement plans and IRAs and allowing certain retirement plans to offer expanded loan options.

Can I get money from my retirement account now?

Under the CARES Act, individuals eligible for coronavirus-related relief may be able to withdraw up to $100,000 from IRAs or workplace retirement plans before Dec. 31, 2020, if their plans allow. In addition to IRAs, this relief applies to 401(k) plans, 403(b) plans, profit-sharing plans and others.

These coronavirus-related withdrawals:

• May be included in taxable income either over a three-year period (one-third each year) or in the year taken, at the individual’s option.
• Are not subject to the 10% additional tax on early distributions that would otherwise apply to most withdrawals before age 59½,
• Are not subject to mandatory tax withholding, and
• May be repaid to an IRA or workplace retirement plan within three years.

Can I take out a loan?

Individuals eligible to take coronavirus-related withdrawals may also, until Sept. 22, 2020, be able to borrow as much as $100,000 (up from $50,000) from a workplace retirement plan, if their plan allows. Loans are not available from an IRA.

For eligible individuals, plan administrators can suspend, for up to one year, plan loan repayments due on or after March 27, 2020, and before Jan. 1, 2021. A suspended loan is subject to interest during the suspension period, and the term of the loan may be extended to account for the suspension period.

Taxpayers should check with their plan administrator to see if their plan offers these expanded loan options and for more details about these options.

Who is eligible?

To be eligible for COVID-19 relief, coronavirus-related withdrawals or loans can only be made to an individual if:

• The individual is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (collectively, COVID-19) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetics Act);
• The individual’s spouse or dependent is diagnosed with COVID-19 by such a test; or
• The individual experiences adverse financial consequences as a result of:

o The individual being quarantined, being furloughed or laid off, having work hours reduced, being unable to work due to lack of childcare, having a reduction in pay (or self-employment income), or having a job offer rescinded or start date for a job delayed, due to COVID-19;
o The individual’s spouse or a member of the individual’s household (that is, someone who shares the individual’s principal residence) being quarantined, being furloughed or laid off, having work hours reduced, being unable to work due to lack of childcare, having a reduction in pay (or self-employment income), or having a job offer rescinded or start date for a job delayed, due to COVID-19; or
o Closing or reducing hours of a business owned or operated by the individual, the individual’s spouse, or a member of the individual’s household, due to COVID-19.

 

Major changes to retirement plans due to COVID-19

Qualified individuals affected by COVID-19 may be able to withdraw up to $100,000 from their eligible retirement plans, including IRAs, between Jan. 1 and Dec. 30, 2020.

These coronavirus-related distributions aren’t subject to the 10% additional tax that generally applies to distributions made before reaching age 59 and a half, but they are still subject to regular tax. Taxpayers can include coronavirus-related distributions as income on tax returns over a three-year period. They must repay the distribution to a plan or IRA within three years.

Some plans may have relaxed rules on plan loan amounts and repayment terms. The limit on loans made between March 27 and Sept. 22, 2020 is raised to $100,000. Plans may suspend loan repayments due between March 27 and Dec. 31, 2020.

Qualifications for relief
The law defines a qualifying person as someone who:

• Has tested positive and been diagnosed with COVID-19
• Has a dependent or spouse who has tested positive and been diagnosed with COVID-19
Experiences financial hardship due to them, their spouse or a member of their household:
o Being quarantined, furloughed or laid off or having reduced work hours
o Being unable to work due to lack of childcare
o Closing or reducing hours of a business that they own or operate
o Having pay or self-employment income reduced
o Having a job offer rescinded or start date for a job delayed

Employers can choose whether to implement these coronavirus-related distribution and loan rules. Qualified individuals can claim the tax benefits of coronavirus-related distribution rules even if plan provisions aren’t changed. Administrators can rely on an individual’s certification that they’re a qualified person.

Required minimum distributions
People who already took a required minimum distribution from certain retirement accounts in 2020 can now roll those funds back into a retirement account.

The 60-day rollover period has been extended to Aug. 31, 2020.

Under the relief, taxpayers with required minimum distributions from certain retirement plans can skip them this year. Distributions that can be skipped were due in 2020 from a defined-contribution retirement plan. These include a 401(k) or 403(b) plan, as well as an IRA. Among the people who can skip them are those who would have had to take the first distribution by April 1, 2020. This waiver does not apply to defined-benefit plans.

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IRS is sending letters to those experiencing a delay with advance payment of employer credits

WASHINGTON – The Internal Revenue Service has started sending letters to taxpayers who have experienced a delay in the processing of their Form 7200, Advance Payment of Employer Credits Due To COVID-19.

A taxpayer will receive letter 6312 if the IRS either rejected Form 7200 or made a change to the requested amount of advance payment due to a computation error.

The letter will explain the reason for the rejection or, if the amount is adjusted, the new payment amount will be listed on the letter.

A taxpayer will receive letter 6313 if the IRS needs written verification from a taxpayer that the address listed on their Form 7200 is the current mailing address for their business. The IRS will not process Form 7200 or change the last known address until the taxpayer provides it.

For more information on the employer credits, see Employer Tax Credits.

Local IRS Offices

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NATP

National Association of Tax Professionals