Important 2020 Tax Season Reminders

by Samantha Pahlow, CTFA

Senior Vice President, Portfolio and Wealth Management

Federal and states governments are working hard to provide support and relief to taxpayers during the COVID-19 global pandemic. One element that will ease the burden on taxpayer cashflow is the delay in due dates for filing and paying your 2019 taxes. We know many of you are inundated with the flow of news and information during this crisis, so we wanted to highlight the key effects on your tax filing requirements this tax season.

Federal Tax Day Delay

Federal tax day has been moved from April 15 to July 15, 2020. This has been enacted automatically for all taxpayers and includes a delay in filing as well as payment of 2019 taxes due and first quarter 2020 estimated taxes. No penalties or interest will accrue during this period.

As of this writing, second quarter estimated taxes have not been extended and remain due on June 15, 2020.

Extension of Time to Make Contributions

The IRS also recently issued guidance confirming that the deadline for making your 2019 contributions to health savings accounts (HSAs) and individual retirement accounts (IRAs) has been extended. Contributions that would have been due by April 15 can now be made as late as July 15, 2020.

State Filing Deadlines

Many states have followed the federal government’s lead and enacted legislation to delay their filing and or payment deadlines. Details vary by state. For example, while Oregon connected to the July 15 filing deadline for filing tax returns and making your final 2019 tax payment, they did not delay the due date for first quarter estimated taxes. Please be sure to communicate with your tax preparer to confirm the details of your own state filing and payment requirements. 

The AICPA is tracking the state legislative action, and you can find their guide here.

Annual 1099 Tax Forms

An important part of many clients’ tax files are 1099s, which are annual tax forms that reflect taxable income such as interest, dividends, and capital gains and losses. Separately, the 1099-R includes tax information for retirement accounts and reflect distributions, transfers and rollovers.

Charles Schwab and other custodians have now released the majority of their 1099s for the 2019 tax year. With client permission, we can generally provide a copy of these forms directly to your tax preparer via secure email. Please contact your portfolio manager if you would like us to do so.

Watch for Corrected 1099 Notices

It is important to note that it is common for companies and funds to modify their tax reporting after the end of the year. When this happens, they provide updated tax information to the custodian, who will then prepare and provide corrected 1099s to clients. Unfortunately, only clients receive notices that updates have been released. Ferguson Wellman and West Bearing do not receive these notices. We can, however, generally access the corrected 1099s if clients inform us of the custodian notice and we can then retrieve and provide them to tax preparers upon request. 

Please be vigilant in watching for updates directly from your custodian and ensure that your tax preparer receives all updates.

Qualified Charitable Distribution

Many of our clients who are over age 70.5 have chosen to make contributions to charities directly from their IRAs, called a qualified charitable distribution (QCD). This often makes great tax sense. It is important to know that the form 1099-R, reporting your annual distributions will not differentiate between taxable distributions and any QCDs. If you have made, or plan to make such distributions, please keep track of them and provide this information to your tax preparer for accurate reporting. You can contact your portfolio team if you need assistance with the details of any transactions for 2019.

This situation is fluid and constantly changing. We will be working to provide timely updates, but please stay in touch with your tax advisors to ensure you have the latest and most accurate information regarding your situation. You may also find the following resources useful:

Federal - https://www.irs.gov/coronavirus

Oregon - https://www.oregon.gov/dor/Pages/COVID19.aspx

Idaho - https://tax.idaho.gov/n-feed.cfm?idd=4313

California - https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/index.html

Arizona - https://azdor.gov/news-events-notices/news/ador-extends-income-tax-deadline-july-15-2020

On March 25, Sammi spoke wth KXL radio about paying taxes now or waiting. A link to her interview can be found here and below is the audio version of the conversation.

Ferguson Wellman and West Bearing do not provide tax or legal advice. This material has been prepared for general educational and informational purposes only and not as a substitute for qualified counsel. You should consult qualified professionals to understand how this information may, or may not, apply specifically to you.

Disclosures