July 15th Is Key for Tax and Cash Flow Planning

Plan Now

Delayed Deadlines

• Federal income tax normally due on April 15, 2020, is now due July 15, 2020.
• Connecticut, New Jersey, and New York state income tax, normally due on April 15, 2020, is now due July 15, 2020.
• Federal 1^st quarter estimated payments, normally due on April 15, 2020, have been moved to July 15, 2020. Additionally, the 2^nd quarter estimate has recently been changed from being due June 15, 2020, to July 15, 2020.
• Connecticut 1^st and 2^nd quarter estimates, normally due April 15, 2020, and June 15, 2020, respectively, have both been moved to July 15, 2020.
• New Jersey 1^st quarter estimate, normally due April 15, 2020, has been moved to July 15, 2020.
• New Jersey 2^nd quarter estimate due June 15, 2020, has remained unchanged.
• New York 1^st quarter estimate, normally due April 15, 2020, has been changed to June 15, 2020.
• New York 2^nd quarter estimate, normally due June 15, 2020, is now due July 15, 2020.
• Contributions made to IRAs and HSAs (health savings accounts) by July 15, 2020 can be counted for 2019 tax year purposes.

• RMDs – The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) waived 2020 RMDs (required minimum distributions) for retirement accounts. In addition, The SECURE Act, passed last December, established 72 as the new age when individuals must begin taking RMDs. The longer investments remain in retirement accounts, the longer they can grow, tax-free. Delaying RMDs also protects you from “locking in” losses in unsettled markets.
• IRA withdrawals –  If you, your spouse, or a dependent has been diagnosed with COVID-19, or you have experienced financial harm due to the pandemic, you can receive favorable tax treatment for withdrawals from your retirement fund from January 1–December 31, 2020.
• Individuals under 59 ½ will not be charged a 10% early withdrawal fee for 2020 distributions.
• For three years from the day following withdrawal, the sum can be “repaid” to the retirement account and treated as a tax-free rollover.
• Withdrawals that are not repaid become taxable over three years, beginning in 2020.

Strategies for Volatile Markets

• Roth conversions –  If your investment portfolio has suffered losses, you may want to consider converting a retirement account to a Roth IRA. That would mean paying tax today on the reduced assets, which could then grow tax-free, with no subsequent RMDs and no tax liability upon withdrawal.
• Tax loss harvesting – Given the recent poor market performance, you may want to evaluate selling securities at a loss to offset capital gains.
• Lifetime gifting – Gift taxes are assessed based on worth as of the date of the gift, so there may be benefits to giving away assets that have recently lost value. Gifting throughout life reduces estate tax at time of death.