Now that the calendar has turned from April to May there will be in effect a “Tax Time Groundhog Day” on July 15th, which is the new 2019 Federal (and most States*) filing deadline for 2019 taxes.
A number of people reading this note may already have signed and filed their 2019 tax returns^ in order to turn the page and move on to 2020 spending, budgeting and saving. However, if you are in the camp that is stretching out your 2019 filing until the July 15th date, then consider a few last-minute items:
- Although the deadline for 401k contributions for 2019 was 12/31/2019, IRA contributions for 2019 can be made up until July 15th of this year. This means that IRA, Roth IRA and Spousal IRA contributions for 2019 can still be made! There may be a tax deduction available under certain income levels or in cases where a 401k plan is not offered by your employer.
- For those taking Required Minimum Distributions from an IRA because either A) you already reached the magic age of 70 1/2 or turn age 72 this year, or B) you are lucky enough to have an Inherited IRA, you do NOT need to take an RMD this year. RMDs have been waived for 2020. If you already took the RMD you can – in many coronavirus related cases – replace the monies, per the CARES Act passed recently by Congress. For replacement of monies there does need to be a reason that qualifies under specific language in the CARES Act and there may be a 60-day limit.
In order not to go too far “into the weeds” on the rest of the CARES Act, please call me with questions or curiosities related to temporary changes related to 401k plans, IRAs and RMDs.
In any event, 2020 has so far been a year of profound changes. For those whose incomes will change meaningfully this year (higher or lower but most likely temporarily lower) there can be tax strategies to keep in mind for minimizing 2020 taxes or taking advantage of the Roth IRA and Roth 401k.
*Check with your tax adviser for your State’s tax filing deadline. Not all States adopted the July 15th Federal extension date.
^Remember: The tax “return” is the document that you sign and file with the IRS. The tax “refund” is the dollar amount that you may receive back from the government for over-payment of taxes.
Please stay safe and strong. Thank you for reading and TGIF!