The outbreak of Coronavirus has upended the daily lives of people all over the world, and taxes are no exception.
As a result, the Internal Revenue Service (IRS) is putting in place a series of measures to offer financial relief to taxpayers who may have experiencing problems filing and paying their taxes under the current situation.
Although the government’s response is fluid, the following terms will help you make sense of the tax landscape during this unprecedented situation.
Economic Impact Payments
This stimulus will be distributed automatically to tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns. Eligible tax payers will receive up to $1,200 for individuals or $2,400 for married couples. In addition, parents will receive $500 for every qualifying child.
Employee Retention Credit
This measure is designed to encourage businesses to keep employees on their payrolls. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
Offers in Compromise (OIC)
An Offer in Compromise (OIC) is an agreement between a tax payer and the IRS to settle a tax liability for less than the amount owed.
People First Initiative
The IRS unveiled recently its People First Initiatives, a series of measures designed as a response to the outbreak of COVID-19. According to this provisions:
- Payments due between April 1 and July 15 will be suspended.
- Field collection activities will be suspended during this period as well.
- The agency will allow taxpayers until July 15 to provide additional information for a pending OIC and it will not close any pending OIC request before that date without the taxpayer’s consent.
The Tax Day is not April 15, as originally planned, but July 15. You don’t have to take any additional actions to take advantage of this extension, since it will be applied automatically. However, it’s important to note that this measure applies to federal taxes, not to state taxes.
The IRS’ response to COVID-19 changes constantly, so it’s important to stay updated. You can check the IRS website or this blog. It’s also a good idea to get advice from an expert who can help you get advantage of the relief initiatives unrolled by the government.
At Meadville Tax Services we have the know-how and the drive to assist you so you can file your taxes efficiently, limiting your tax liability while staying compliant with federal tax regulations.